Accumulation Distribution Oscillator

What

The Accumulation Distribution Oscillator is simply the Moving Average Convergence Divergence indicator (MACD) applied to the Accumulation/Distribution Line. Just as the MACD-Histogram is an indicator to predict moving average crossovers in MACD, the Accumulation Distribution Oscillator is an indicator to predict changes in the Accumulation/Distribution Line.

Many of the same signals that apply to MACD are also applicable to the Accumulation Distribution Oscillator. Keep in mind though, that these signals relate to the Accumulation/Distribution Line, not directly to the security itself. Readers may want to refer to the MACD article for more detailed information on various signals such as positive divergences, negative divergences and centerline crossovers.

How

The formula is the difference between the 3-day exponential moving average and the 10-day exponential moving average of the Accumulation/Distribution Line

When

• Bullish Signals

There are two bullish signals that can be generated from the Accumulation Distribution Oscillator: positive divergences and centerline crossovers. Because the Accumulation Distribution Oscillator is an indicator of an indicator, it is prudent to look for confirmation of a positive divergence (a bullish moving average crossover, for example) before counting this as a bullish signal.

• Bearish Signals

There are, also, two bearish signals that can be generated from the Accumulation Distribution Oscillator: a negative divergence and a bearish centerline crossover. Allow a negative divergence to be confirmed by a bearish centerline crossover before a bearish signal is rendered.