The Volume Sounding
Measure what's beneath the surface. Accumulation Distribution and Intraday Intensity — volume confirmation for every Bollinger method.
How This Works
Accumulation Distribution (AD) measures buying and selling pressure based on the open/close relationship within the daily range. Created by Marc Chaikin.
AD = (Close − Open) / (High − Low) × Volume
A strong stock opens low and closes high — positive AD. A weak stock cannot hold gains into the close — negative AD. When combined with Bollinger Bands, AD confirms or contradicts price extremes.
Intraday Intensity (II) evaluates where the close sits within the daily range. Created by David Bostian.
II = [(2 × Close) − High − Low] / (High − Low) × Volume
Close at the high = +1 (maximum buying pressure). Close at the low = −1 (maximum selling pressure). Close at mid = 0 (neutral). II is especially powerful at Bollinger Band extremes — a lower band tag with positive II% suggests capitulation and reversal.
Worked Example — AD
Input: Open = $50.00 | High = $52.00 | Low = $49.00 | Close = $51.50 | Volume = 1,000,000
AD: ($51.50 − $50.00) / ($52.00 − $49.00) × 1,000,000 = 1.5 / 3 × 1,000,000 = +500,000
AD%: 1.5 / 3 = +0.50 (moderate buying pressure)
Interpretation: The stock opened near the low, closed near the high — strong intraday accumulation. If this occurs at the lower Bollinger Band, it is a powerful bottom signal.
Worked Example — II
Input: High = $52.00 | Low = $49.00 | Close = $51.50 | Volume = 1,000,000
II: [(2 × $51.50) − $52.00 − $49.00] / ($52.00 − $49.00) × 1,000,000 = ($103 − $101) / 3 × 1,000,000 = +666,667
II%: 2 / 3 = +0.67 (strong buying pressure)
Interpretation: Close in upper third of range. If at lower band, this nonconfirmation of weakness suggests a reversal. If at upper band, it confirms trend strength.