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Studying Breadth of the Market
Studying Breadth of the Market
The IITian Trader Cheetah’s Market Breadth – ADS (Advance, Decline, Same) feature is comparable to a breadth indicator. Using a formula, the breadth indicator counts the number of rising and falling stocks. It captures the mood of the market. A trader could learn about the state of a market by looking at ADS. The third line, labelled “Same line,” displays the fraction of stocks that are neither rising nor falling in price; it displays equities with no change in close price.
Studying convergence and divergence will help you better understand the Advance-Decline line
Convergence
A convergence that is bullish occurs when the advance line crosses the decline line from the bottom to the top. It typically demonstrates market trend reversals from bearish to positive.
Bearish – bearish convergence results when the advance line moves downward and crosses the decline line. This often signals a market reversal to the downside.
Divergence
ADS is establishing new highs or lows after convergence. This can be used to spot a pattern where fewer stocks are losing value and the index’s decline may be coming to an end. As a result, a trader can use the expression “% chg” to identify a stock within a group.
Bearish divergence may follow a similar trading pattern.
Ratio
If the A/D ratio is over 1.25, the market is in a bullish trend; if it is below 1.25, the market is in a bearish trend; and if the A/D ratio is between 0 and 1, the market is in a bearish to choppy trend. If 0.60 or lower, the A/A+D formula indicates a strong bullish trend; otherwise, it indicates a bearish trend.
This IITian Trader Cheetah function is crucial for trading since it provides you with a broad picture of the market.
