Accumulation/Distribution (A/D)
The flaw in OBV is that it makes no distinction between large and small price moves. All are treated the same. Another volume indicator, accumulation/distribution (A/D), corrects this flaw.
A/D takes into account the range of price for each session so that the daily change in the A/D index is adjusted to show bigger moves for bigger price changes and smaller moves when the price change is slight. This is an excellent volume indicator for the large numbers of analysts believing that volume leads price. Using A/D, it is possible to spot reversal before price signals confirm a change. The divergence between A/D and price is among the strongest early warnings of a trend ending and about to reverse. A bullish divergence ...
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