Accumulation/Distribution Line

The Accumulation/Distribution (A/D) Line is a cumulative technical indicator developed by Marc Chaikin that uses both price and volume to assess the supply and demand dynamics behind a security's price movement. The indicator calculates a "Close Location Value" (CLV) multiplier by comparing where the closing price falls within the day's high-low range: a close near the high produces a positive multiplier, while a close near the low produces a negative one. This multiplier is then applied to the period's volume, and the result is added to a running cumulative total. When the A/D Line is rising, it suggests that buying pressure (accumulation) is dominant — meaning the security is closing in the upper portion of its range on higher volume. A falling A/D Line indicates selling pressure (distribution). One of the most powerful uses of the A/D Line is identifying divergences: if a stock's price is making new highs but the A/D Line is declining, it may signal hidden selling pressure and an impending reversal. Conversely, if price is making new lows while the A/D Line is rising, it suggests accumulation is occurring and a bullish reversal may be near. The indicator is most effective when used alongside other technical tools for confirmation.