Indicator - Advance-Decline Line
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Calculation Advance-Decline Line
The Advance-Decline Line is a market breadth indicator, concerning all financial instruments in a given market and can be compared to the corresponding market index.
Indicator = Previous indicator value + (number of increasing stocks this period - number of declining stocks this period)
Interpretation Advance-Decline Line
If the Advance-Decline is moving in the same direction as the market index, the trend is expected to continue.
On the other hand, a divergence between the indicator and the price of the market index can be considered a trend reversal signal.
In a bullish trend, if the market index touches a new highest point which is not confirmed by the indicator, it could be a signal that the bullish trend may be ending.
In a bearish trend, it is when the indicator touches a new low point and the index does not confirm it, that a positive divergence signal is sent, indicating that the bearish trend may be ending
