Accumulation/Distribution XAUUSD Technical Analysis and Accumulation/Distribution XAUUSD Signals
Developed by Marc Chaikin
This xauusd indicator is used to assess the cumulative flow of money into and 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 is coming into and out of a stock.
The basic principle behind AD is that volume(or money flow) is a leading indicator of the gold price. (Volume precedes xauusd price).
Tick volume is the measure of gold price changes (ticks) received by a xauusd broker during a particular trading period/interval. The tick volume is incorporated by many xauusd brokers in their charting software.
This volume indicator is used to determine if volume is increasing or decreasing as the gold price on a xauusd chart is rising or falling.
If the gold price on a xauusd chart is rising then the Accumulation/Distribution should also be rising. This shows that the gold price move is being supported by volumes and the move upwards has strength and is sustainable.
If on the other hand gold price is moving up and the volumes are not, the strength behind the move is reducing; this creates divergence between gold price and indicator and warns of a possible move in the opposite direction.
If the gold price on a xauusd chart is falling then the AD should also be falling. This shows that the gold price move is being supported by volumes and the move downwards has strength behind it.
If on the other hand gold price is moving down and the volumes are not, the strength behind the move is reducing; this creates divergence between gold price and AD and warns of a possible move in the opposite direction.
XAUUSD Technical Analysis and Generating XAUUSD Signals
Below is an example of a xauusd chart and the technical analysis explanation
From the chart above we can separate the chart into three parts, part A, B and C.
A - Upward xauusd trend line on chart as well as on the Accumulation/Distribution
B - Downward xauusd trend line on chart as well as on the Accumulation/Distribution
C - Upward xauusd trend line on chart as well as on the Accumulation/Distribution
As long as the gold price and the indicator are moving in the same direction then the gold price move has enough momentum to continue moving in that direction as shown above
XAUUSD Trend Line Break
From the above chart we can see that once the xauusd trend line on the AD was broken then the gold price xauusd trend line was also broken.
Looking at the chart below we have added vertical lines to represent the points where the xauusd trend lines were broken, both on the gold price chart and the indicator.
Comparing the xauusd trend lines on the indicator and the gold price those of the AD were broken before those of the chart. This is because volume always precedes gold price.
Exit signals are generated when the xauusd trend line on the Accumulation/Distribution is broken. A xauusd trend line break on the indicator warns of a possible reversal.
Once the xauusd trend line on the AD is broken it warns of a possible reversal in the direction of the gold market.
However if we want to take a trade in the opposite direction it is always best to wait for a confirmation signal.
A confirmation signal is considered complete once both the indicator and the gold price breaks both their xauusd trend lines.
Entry Signal Generated by XAUUSD Trend Reversal