Accumulation Distribution Technical Analysis & Accumulation/Distribution Signals

Created by Marc Chaikins

This indicator is used to assess the cumulative flow of money into & out of a xauusd.

Originally used for stocks trading, when it comes to stocks trading "volume" is the amount of shares traded in a particular stock, this volume is a direct reflection of the money that's coming into & out of a stock.

The basic principle behind AD is that volume(or money flow) is a leading indicator of price. (Volume precedes price).

Tick volume is the measure of price changes (ticks) received by a online broker during a particular period/interval. Tick volume is incorporated by many online brokers in their charting software.

Interpretation

This volume technical indicator is used to determine if volume is increasing or decreasing as the price on a chart is rising or falling.

UpXAUUSD Trend

If the price on a chart is rising then the Accumulation Distribution should also be rising. This displays that the price move is being supported by volumes & the move upward has strength and is sustainable.

If on the other hand trading price is moving up and the volumes are not, the momentum behind the move is waning: this develops divergence between price & indicator and warns of a possible move in the opposite market direction.

DownGold Trend

If the price on a chart is falling then the AD indicator should also be falling. This displays that the price move is being supported by volumes & the move downward has strength behind it.

If on the other hand trading price is moving down and the volumes are not, the momentum behind the move is waning: this develops divergence between trading price & AD & warns of a possible move in opposite market direction.

XAUUSD Analysis & How to Generate Signals

Below is an example of a chart and the trading analysis explanation

Accumulation/Distribution Technical XAUUSD Indicator - Accumulation/Distribution Technical Indicator

From chart above we can separate the chart in to 3 parts, part A, B and C.

A - Upward trend-line on the chart as well as on the AD

B - Downward trend-line on the chart as well as on the AD

C - Upward trend-line on the chart as well as on the AD

As long as the price & the technical indicator are heading in the same direction then the price move has enough momentum to continue heading in that particular direction as displayed above

Trend-Line Break

From the above chart we can see that once the trend line on the AD was broken then the price trend-line was also broken.

Looking at the chart below we have added vertical lines to represent the points where the trend lines were broken, both on the price chart & the indicator.

Comparing the trend lines on the indicator & the price those of the AD indicator were broken before those of the chart. This is because volume always precedes price.

How Do I Place Accumulation/Distribution Indicator in Chart?

Signals

Exit

Exit signals are generated when the trend-line on the Accumulation Distribution is broken. A xauusd trend line break on the technical indicator warns of a possible reversal.

How Do I Place Accumulation/Distribution Indicator in Chart in Platform?

Entry

Once the trendline on the AD is broken it warns of a possible reversal in the direction of the market.

However if we want to take a trade position in the opposite market direction it's always best to wait for a confirmation signal.

A confirmation signal is considered complete once both the indicator & the price breaks both their trend lines.

Entry Signal - Generated by Trend Reversal - How Can Trader Generate Buy & Sell Signals?

Entry Signal Generated by Trend Reversal

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