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- If the price reaches a new maximum, but the accumulation/distribution indicator cannot reach a new maximum, it means that the security is distributing itself. It is a signal for sell.
- If the price reaches a new minimum, but the accumulation/distribution indicator cannot reach a new minimum, it means that the security is accumulating. It is a signal for buy.
Williams'Accumulation/Distribution indicator
Calculation:
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To calculate the accumulation/distribution indicator, first you have to find a "True Range High" (TRH) and "True Range Low" (TRL):
TRH (i) = MAX (HIGH (i) || CLOSE (i - 1))
TRL (i) = MIN (LOW (i) || CLOSE (i - 1))
Then you must find the current value of accumulation/distribution (CurA/D) by comparing today and yesterday's closing prices.
If the current closing price is higher than the previous one, then:
CurА/D = CLOSE (i) - ТRL (i)
If the current closing price is lower than the previous one, then:
CurА/D = CLOSE (i) - ТRH (i)
If current and previous closing prices coincide then:
CurА/D = 0
Williams' accumulation/distribution indicator is a growing sum of these values for each day:
WА/D (i) = CurА/D + WА/D (i - 1)
where:
- TRH (i) - the True Range High;
- TRL (i) - the True Range Low;
- MIN - the minimum value;
- MAX - the maximum value;
- || - the logical OR;
- LOW (i) - the minimum price of the current bar;
- HIGH (i) - the maximum price of the current bar;
- CLOSE (i) - the closing price of the current bar;
- CLOSE (i - 1) - the closing price of the previous bar;
- CurА/D - means current value of accumulation/distribution;
- WА/D (i) - the current value of William's Accumulation/Distribution indicator;
- WА/D (i - 1) - the value of William's Accumulation/Distribution indicator on the previous bar.
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