Accumulation/Distribution Trading Analysis & Accumulation/Distribution Trade Signals

Developed by Marc Chaikin

This indicator is used to assess the cumulative flow of money into and out of gold.

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

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

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

Interpretation

This volume indicator is used to identify if volume is increasing or decreasing as the gold price on a chart is moving up or moving down.

UpGold Trend

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

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

DownXAUUSD Trend

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

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

Trading Analysis and Generating Signals

Below is example of a chart and the trading analysis explanation

Accumulation/Distribution XAUUSD Strategy Buy and Sell XAUUSD Technical Indicators XAUUSD Checklist

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

A - Upward trendline on chart as well as on the AD

B - Downward trendline on chart as well as on the AD

C - Upward trendline on chart as well as on the AD

As long as the gold price & the indicator are moving in the same direction then the gold price move has enough force to continue heading in that direction like displayed above

XAUUSD Trend Line Break

From the above chart we can see that once the trend line on the AD was broken then the gold 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 gold price chart & the indicator.

Comparing the trendlines on the indicator & the gold price those of the AD were broken before those of the chart. This is because the volumes always precedes the price.

Technical Analysis of Accumulation Distribution Indicator

Signals

Exit

Exit signals are generated/derived when the trend line on the Accumulation/Distribution is broken. A trend line break on the technical indicator warns of a potential reversal.

Accumulation/Distribution Indicator Analysis Trade Signals

Entry

Once the trend line on the AD is broken it warns of a potential reversal in direction of the price.

However if we want to take a trade position in the in the opposite trend market trend market trend market trend market trend market trend market direction it is always best to wait and chill for a confirmation signal.

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

Accumulation/Distribution Indicator Analysis Trade Signals - Accumulation Distribution Indicator

Entry Signal Generated by Trend Reversal

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