Forex Technical Analysis Articles - Volume based indicators - Accumulation/Distribution

Technical Analysis

1. Introduction

2. Function & Calculation

3. Ex. 1 - Long Term Divergence

4. Ex. - 1 Cont.

5. Ex. - 1 Conclusion

6. Ex. 2 - Short Term Divergence

7. Ex.2 - Cont.

8. Recap of Ex. 2

9. Ex. 2 - Final Divergence

10. Comparing 4H to Daily Charts

11. Ex.3 - Fundamental Release

A volume indicator which tries to gauge supply and demand for a currency pair by discovering if investors are generally “Accumulating” (buying) or “Distributing” (selling) the pair. The basic premise has always been that volume (or money flow) may be a leading indicator to price action. This indicator is a variant of the more commonly used indicator On Balance Volume. They are both used to confirm price changes by looking at whether there is more volume on buying or selling sessions.

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Table of Contents

1. Introduction
Here we explain some basic information about the Accumulation/Distribution indicator.

2. Function & Calculation
The purpose and computation of the A/D indicator are explained.

3. Ex. 1 - Long Term Divergence
Accumulatio/Distribution is applied in a long term view of the EUR/USD pair from 2003 to 2006.

4. Ex. - 1 Cont.
We delve in and explore the year 2004 in more detail.

5. Ex. - 1 Conclusion
Our long term look concludes with an examination of the pair's movements from August 2005 to May 2006.

6. Ex. 2 - Short Term Divergence
We switch gears and take a look at short term charts that show divergence between price and the A/D indicator.

7. Ex.2 - Cont.
We continue looking at a 4 hour chart of EUR/USD to highlight the use of divergences while using trendline analysis with A/D.

8. Recap of Ex. 2
Here we recap what we have learned so far from our first two divergences in our example.

9. Ex. 2 - Final Divergence
Our example continues with a look at two more divergences.

10. Comparing 4H to Daily Charts
We zoom out from our shorter term look to see the same time period as our divergences in a daily chart. This gives a trader further perspective.

11. Ex.3 - Fundamental Release
Technical analysis is combing with fundamental analysis to see how one can help the other.