The Accumulation/Distribution (A/D) line is a cumulative volume-flow indicator. Each bar it adds a “money flow volume” value — based on where price closed within the bar's range, weighted by volume — to a running total. A rising A/D line signals ongoing accumulation (net buying); a falling line signals distribution (net selling). It's the cumulative cousin of Chaikin Money Flow.
What it shows
Because it's cumulative, the A/D line reads the bigger-picture flow beneath price. When the A/D line trends up alongside price, the uptrend is backed by real buying. When they diverge — price rising while the A/D line falls, or vice versa — it warns the move isn't supported by volume flow, hinting at a potential reversal. The divergence is the A/D line's most-used signal.
How to use it
Use the A/D line mainly for divergence and confirmation. A/D line making new highs with price confirms trend health; A/D line failing to confirm a new price high (a bearish divergence) is an early warning of distribution under a rising market. On an intraday basis it can flag whether a move has genuine flow behind it or is running on thin participation — a slower, cumulative read than delta divergence.
The A/D line is the market's running receipt of buying vs selling. When it disagrees with price, someone is quietly on the other side.
The limits
The A/D line uses closing position within each bar and ignores gaps between bars, which can distort it on gappy tape, and it's a lagging, cumulative measure that can diverge long before price turns. It's a context/confirmation tool, best for spotting divergence and confirming trend health — not a precise entry trigger. Read it alongside price structure and the regime.