facebook  youtube  blogger

Accumulation / Distribution

What exactly is accumulation and distribution? It sounds simple, but I've never been able to figure out what they are talking about!


There are four market phases containing all price action. The accumulation phase has low range and volume and occurs at the bottoms of a prolonged bear market. We saw such a situation in the past in gold, which made a long-term bottom after a 21-22 year secular bear downtrend.

The bullish up trend move begins with increased daily range price bars and sharply rising prices above the highest highs of the previous twenty-day period. When we see that in a market, we know we are in a bullish uptrend phase, almost at the very beginning. Such a move could last for many years.

The distribution phase has wide range price bars of extreme volatility where the traders, who accumulated the underlying at the bottom, distribute it to the lesser informed public.

The bear phase begins when the market breaks sharply on wide range days below the lowest lows of the previous twenty days. There are four types of gaps, openings beyond the previous price bar's range, corresponding to market phases: general —day to day gaps; break away gaps – leaving a consolidation period; run away gaps – vertical or panic markets occurrences; and exhaustion gaps – ending the distribution phase.


Sign up for our FREE weekly Chart Scan newsletter.

We want to hear from you, Joe Ross wants you to learn trading. Email us your questions or if you need additional information. Another great investment is private mentoring with Joe, our students find this very helpful and accelerates their trading successes.

Private Mentoring with Joe Ross - Sign Up Today


 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Tuesday, 07 December 2021

By accepting you will be accessing a service provided by a third-party external to https://tradingeducators.com/

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.