Forex indicator Accumulation and distribution was made by Chaikin the famous person in Forex trading market, this indicator is based on modification of on balance volume indicator Joe Granville, and accumulation indicator Larry Williams.
If the On Balance Volume Indicator metatrader calculate the last and the previous closing price, and accumulation indicator calculate the closing price and opening price. The Accumulation and distribution indicator calculate the closing price of the mid from high and low.
Commonly accumulation and distribution indicator was calculated to identify of the market cash flow. Now, accumulation and distribution trading system has been used in the Forex trading market.
And here is the Accumulation and distribution indicator calculation.
Accumulation and distribution indicator formulat characteristic
- If the market price is closed at the high, the value will be same 1 volume
- If the market price is closed above the mid level closer with the high, the volume is multiply by number between 0-1
- If the market price close in the mid between high and low, the value is 0
- If the market price close lower than means, volume is multiplied by the value between 0 and -1
- if the market price close at the low, then the value is same with -1
Forex trading market has no buy and sell volume data, so forex volume indicator only calculates the tick volume data. The bigger the volume technical indicator, the more significant of the market price move. Thus the accumulation and distribution indicator formula is like EMA forex indicator calculation formula.
Forex traders knew that the bullish trend, the closing market price is closer with high price. and in the bearish trend the closing market price is closer with low price. The Accumulation and distribution indicator shows the volume fluctuation in the forex trading market. This indicator also can be used to determine the cash flow in the market. The rising indicator reflects that the buyers strength is bigger than sellers, and in the declining accumulation and distribution indicator reflect that the sellers strength is bigger than buyers. This indicator is also traded to determine the strength signal behind the market price.
We can use the chart pattern trading analysis methods on the accumulation and distribution indicator chart. In other word we can use such double top, double bottom and etc in accumulation and distribution indicator line chart.
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