An asset is said to have advanced over a certain time period if the closing price is higher than the opening price for that period. On the other hand, an asset has declined when the close is lower than the open for that time period.
The Advance Decline Index (ADI) is calculated as the daily advances - daily declines + PIV, where PIV stand for prior index value. The ADI can be seen as the running sum of the difference between daily advances and daily declines.
An increasing index value suggests that there are more advancing cryptocurrencies than declining cryptocurrencies. A decreasing index value suggests the opposite, with more declining cryptocurrencies than advancing cryptocurrencies.
If the total market cap is trending higher and the ADI is also trending higher, it can confirm the trend and suggest that it is likely to continue. Conversely, if the total market cap is trending higher, but the ADI is trending lower, it can indicate that the trend may be losing momentum and could be due for a reversal. Video by Benjamin Cowen.
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