Chaikin A/D Oscillator measures the momentum of the Accumulation/Distribution line by comparing two moving averages (3-period and 10-period). This shows whether accumulation is accelerating or distribution is intensifying.
Key Use: Detect shifts in accumulation/distribution momentum before A/D line reverses.
ADO = EMA(A/D, 3) - EMA(A/D, 10)
Where A/D = Accumulation/Distribution Line
Above Zero
Short EMA above long - accumulation accelerating
Below Zero
Short EMA below long - distribution intensifying
Momentum Divergence
Price at new high but ADO declining = early distribution warning.
Zero-Line Crosses
Crossovers signal shifts from accumulation to distribution.
Trend Confirmation
Strong accumulation momentum (positive ADO) confirms uptrend.
✓ Advantages
⚠ Limitations