The Accumulation/Distribution Buying Pressure study is used to evaluate strength of the trend by finding divergences between price plot and the indicator itself. It is calculated using two modes: Accumulation and Distribution:
- The indicator is in Accumulation mode when the Close priсe of the current bar is greater than that of the previous bar. Accumulation is calculated as the difference between the current Close and lowest of the two values: current Low and previous Close.
- The indicator is in Distribution mode when the Close priсe of the current bar is lower than that of the previous bar. Distribution is calculated as the difference between the current Close and greatest of the two values: current High and previous Close.
The final value is equal to algebraic sum of all prior Accumulation and Distribution values. Bars whose Close price is equal to that of the previous bar add zero to the final result.
The trend strength can be evaluated using the following algorithm. If the market makes new highs while the indicator decreases, it is a signal of weakening uptrend; market making new lows while the indicator is rising suggests weakening downtrend.
||The Accumulation/Distribution Buying Pressure plot.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.