The AD Volume Line indicator measures buyer and seller strength.

You need to calculate the volume of securities that close upwards and downwards end of day.

 

You have to calculate the difference between the upwards volume and the downwards volume.

The AD Volume Line indicator accumulating this difference day after day to draw the line.

 

This difference is the Net Advancing Volume:

 

AD Volume Line Indicator

 

You can calculate the line on the significant S&P500, Nasdaq and NYSE indices to highlight the trend’s strength.

 

During a bullish trend, it shows a strengthening of the upward pressure and confirms the presence of an up-trend.

During a bearish trend, it shows a strengthening of the downward pressure and confirms the presence of a down-trend.

 

The AD Volume Line Indicator using an average of 10/20 periods when calculate.

 

AD Volume Line Indicator Divergences

There is a positive divergence when the index declines with new decreasing lows, while the AD Volume Line rebounds and draws increasing lows.

There is a negative divergence when the index moving up with new increasing highs, while the AD Volume Line weakens and draws decreasing highs.

 

You can draw the trendlines on the AD Volume Line to identify potential levels of support and resistance.

On the same line, you can calculate the moving averages to find some trading signals.

 

 

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