Accumulation Distribution Technical Analysis and Accumulation/Distribution Signals

Created and Developed by Marc Chaikin

This indicator evaluates the total flow of money into and out of XAU/USD.

Originally used for trading stocks, "volume" is the number of shares traded in a specific stock: this number directly shows how much money is being invested in, or taken out of, the stock.

The main thought behind AD is that volume (or how money flows) tells you where prices might head. (Volume comes first).

Tick volume tracks every price change - every tick - that your broker receives during a certain time. Most brokers include tick volume in their charting tools.

Interpretation

This volume indicator is used to determine if volume is increasing or decreasing as the price on a chart is moving upward or moving downward.

UpXAUUSD Trend

If the price on the chart is ascending, the Accumulation Distribution line should mirror this upward movement, confirming that volume is supporting the price action, lending strength and sustainability to the advance.

If price rises but volume stays flat, momentum fades. This creates divergence between price and indicator. It signals a potential shift in trend.

DownGold Trend

If chart prices fall, the AD line should drop too. This means volume backs the slide with real force.

If the price is dropping but the volumes aren't, the move's strength is lessening: this makes a difference between price and AD and warns that the trend could go in the other direction.

XAUUSD Analysis and How to Generate Trading Signals

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

Accumulation/Distribution Technical XAU/USD Indicator - Accumulation/Distribution Indicator

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

A - Upward trend-line on the chart and also on the AD

B - Downward trend-line on the chart and also on the AD

C - Upward trend-line on the chart and also on the AD

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

TrendLine 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.

The chart below includes vertical lines to mark where trend lines broke on both the price graph and the indicator.

Comparing the trendlines on the indicator and 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 in Chart?

Signals

Exit

Egress signals are generated and identified when the trend delineation on the Accumulation Distribution indicator is breached. A break in the xauusd trend line on this indicator signals a potential trend reversal.

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

Entry

When the trend line associated with the AD (Advance/Decline line) is breached, it signals a potential shift in the market's current direction.

But if we decide to make a move that goes against what's generally happening, we must first make sure it's really happening.

A definitive confirmation signal is achieved when both the indicator and the price action successfully breach their respective trendlines.

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

Entry Signal Derived/Generated by Trend Reversal

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