Accumulation/Distribution

Accumulation/Distribution Technical Indicator

The Accumulation/Distribution Technical Indicator is determined by the changes in price and volume. The volume acts as a weighting coefficient at the change of price — the higher the coefficient (the volume) is the greater the contribution of the price change (for this period of time) will be in the value of the indicator.

Confirmation of Price Changes

The Accumulation/Distribution indicator, similar to the On Balance Volume indicator, is used to confirm price changes by measuring the respective volume of sales.

Accumulation and Distribution

When the Accumulation/Distribution indicator grows, it means accumulation (buying) of a particular security, as the overwhelming share of the sales volume is related to an upward trend of prices. Conversely, when the indicator drops, it means distribution (selling) of the security, as most of sales take place during the downward price movement.

Divergences and Price Changes

Divergences between the Accumulation/Distribution indicator and the price of the security indicate upcoming changes in prices. In such cases, the price tendency usually moves in the direction in which the indicator moves. For example, if the indicator is growing while the price of the security is dropping, a turnaround of price should be expected.