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Farley's Accumulation-Distribution Accelerator (ADA)

Farley's ADA (From The Master Swing Trader)


What it is :
  • ADA is designed to track volume oscillations in the market and reduce the impact of shock events.
  • It observes the supply-demand dynamics within the market, which can trigger natural levels of price reversals.


How It Works

  • Volume and Price Relationship: ADA measures the lag between price and volume movements. It highlights when volume leads or lags behind price changes, helping traders identify potential reversals or trends.

  • Signal Generation: ADA can generate faster and cleaner signals compared to traditional indicators like On-Balance Volume (OBV).



Usage
  • Support and Resistance: ADA formations can help identify support and resistance levels and trendlines.
  • detect natural levels where price reversals might occur.
  • Trend Identification: Look for significant divergences between ADA and price action to identify potential trend reversals.
  • Volume Analysis: Use ADA to anticipate pauses in price movements when volume leads, and expect dynamic trends when ADA significantly moves ahead of price action.
Accumulation / Distribution Line (ADL)Volume IndicatorVolume

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