AD (AD)

AD (Accumulation/Distribution Line) is a cumulative volume-weighted indicator created by Marc Chaikin that measures buying vs selling pressure. It calculates the Close Location Value (CLV) using the formula: CLV = ((Close - Low) - (High - Close)) / (High - Low), which determines where the close is relative to the day's range. This CLV is then multiplied by volume and added to the running total. When price closes in the upper portion of the range with high volume, AD rises significantly (accumulation). When price closes in the lower portion with high volume, AD falls (distribution). The absolute value is less important than the trend direction and divergences.

Cryptocurrency traders use AD to confirm price trends and identify potential reversals through divergences. When AD rises with price, it confirms strong buying pressure supporting the uptrend. When AD falls with price, it confirms distribution driving the downtrend. The most powerful signals occur when AD diverges from price: if price makes new highs but AD doesn't, bearish divergence warns of weakening momentum. If price makes new lows but AD rises, bullish divergence suggests accumulation at lower prices. AD is popular in crypto markets for filtering false breakouts, as genuine breakouts are typically accompanied by rising AD. Combine AD with price action, MACD for momentum confirmation, and RSI to identify overbought/oversold conditions during divergences.