Accumulation/Distribution XAUUSD Technical Analysis & 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 trading price. (Volume precedes gold trading price).

Tick volume is the measure of gold trading price changes (ticks) received by a broker during a particular trading period/interval. Tick volume is incorporated by many xauusd brokers in their charting software.

Interpretation

This volume indicator is used to determine if volume is increasing or decreasing as the gold trading price on a xauusd chart is rising or falling.

UpXAUUSD Trading Trend

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

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

DownGold Trading Trend

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

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

Gold Technical Analysis & How to Generate Trading Signals

Below is an example of a xauusd chart and the technical analysis explanation

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

A - Upward xauusd trendline on chart as well as on the Accumulation/Distribution

B - Downward xauusd trendline on chart as well as on the Accumulation/Distribution

C - Upward xauusd trendline on chart as well as on the Accumulation/Distribution

As long as the gold price & the indicator are moving in the same direction then the gold trading price move has enough momentum to continue moving in that direction as 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 trend lines on the indicator & the gold trading price those of the AD were broken before those of the chart. This is because volume always precedes gold trading price.

Trading Signals

Exit

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

Entry

Once the trend line on the AD is broken it warns of a possible reversal in the direction of the 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 & the gold trading price breaks both their xauusd trend lines.

Entry Signal Generated by XAUUSD Trend Reversal