Farley's Accumulation-Distribution Accelerator (ADA)

14 oct

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.