Trade Forex Trading

Accumulation Distribution Technical Analysis and Accumulation/Distribution Signals

Created and Developed by Marc Chaikin

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 broker during a specific period/interval. Tick volume is incorporated by many brokers in their charting software.

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 a chart is moving up then the Accumulation Distribution should also be moving up. This highlights 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 trend market direction.

DownGold Trend

If the price on a chart is moving down then the AD indicator should also be moving down. This highlights 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 price & AD & warns of a possible move in the opposite trend 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 the price move has enough energy to continue heading 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.

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 and the technical 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

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

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

Entry

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

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

A confirmation signal is considered complete once both the indicator and the price breaks both their trendlines.

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

Entry Signal Derived/Generated by Trend Reversal

Learn More Lessons and Tutorials & Courses:

Forex Market Traders Seminar Gala

Forex Market Traders Seminar

XAUUSD Broker