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2023-01-23clock10 minutes

Is the market trending up or down?

The advance/decline line indicates the breadth of the market, showing how many assets are rising or falling. It is a sentiment signal that reflects the overall health of the market by calculating the ratio of upward trends to downward trends in asset prices.

Is it likely to reverse?

Understanding the A/D line and how it is calculated is key to being able to predict where the market will go. The Net Advances is the difference between the number of assets that finished lower and those that finished higher on a given day or time period. Over time (days, hours, minutes), the line will grow by adding the total from the previous period if it is positive, or subtracting if it is negative. If the index prices are moving up but the A/D line is going down, then we have bearish divergence, which means the markets are losing momentum and could reverse direction. On the other hand, if the index prices are continuing to fall while the A/D line turns upwards, we have bullish divergence, meaning the market could head in the buyers' direction. If both trend lower together, then it is likely prices will continue to decline.

Use the A/D line with other indicators

Understanding the A/D line is useful in context with other trading signals, such as Moving Averages, Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and the Ichimoku Cloud.

Setting the A/D line

Click Exchange to enter Cryptal's spot trading market. On the right side of the Trading View window, click Indicators and select Advance/Decline.