How to interpret this conflicting trends in OBV and Accumulation/Distribution Indicator?

Question

I know technical Indicators should always be taken with a grain of salt.

Sometimes it gets more confusing when two similar indicators give absolutely different trend.

The First indicator in red is the Accumulation/Distribution followed by OBV and RSI at the bottom.

What can be interpreted from this conflicting trends in the OBV which shows weak positive sign and Accumulation/Distribution shows a severe reversal sign.

I know both of these use the same Volume/Price data but in different ways. Which can cause these discrepancy but this example looks too good and there is a clear downtrend in the A/C charts.

How can this be interpreted logically ?

Chart can be seen on https://in.tradingview.com/chart/B7YpNwNA/

Answer 1

The recent discrepancy between A/D and OBV comes mainly from a couple of green candles with long upper wicks (the 3rd and 9th from the last on the chart). These had relatively high volume, which was counted negatively by A/D because the close was in the lower part of the range, but was counted positively by OBV because the close was higher than the previous close. OBV ignores wicks (the high and low price), but a long wick can be a sign that a price extreme has been "rejected" (the market reverses by the close), suggesting exhaustion or lack of conviction in that direction. Hence A/D interprets a long upper wick as bearish.

Answer 2

The short answer is that if you look at the formula for any indicator, it will tell you why it does what it does.

In this case, the OBV adds today's volume to the previous day's OBV value if today's price is higher and subtracts today's volume if price is lower.

The Accumulation/Distribution prorates the volume addition or subtraction based on where the close is in relation to the high and the low.

So if it's a high volume day with very little price change, the OBV indicator is going to change much, much more than the A/D indicator.

I never found any usefulness for either of these indicators.