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Learning
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Wednesday, 29 August 2007 12:24 |
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Accumulation/Distribution Accumulation/Distribution Technical Indicator is determined by the changes in price and volume. This indicator is a variant of the On Balance indicator. Both indicators can help us to predict how price will change according to volume change.
Bullish Signal A bullish signal is given when the Accumulation/Distribution Line forms a positive divergence. Be careful with weak positive divergences that fail to make higher highs or those that are relatively young. The main thing is to identify the general trend of the Accumulation/Distribution Line. A one-week positive divergence may be a bit suspect. However, a four-week positive divergence deserves serious attention.
Another means of using the Accumulation/Distribution Line is to confirm the strength of a trend. The Accumulation/Distribution Line should keep up or, at the very least, move in an uptrend. If the stock is moving up at a rapid clip, but the Accumulation/Distribution Line has trouble making higher highs or trades sideways, it should serve as an indication that buying pressure is relatively weak. Bearish Signal Bearish signals can be seen as the opposite of the bullish signals.
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Last Updated on Friday, 18 July 2008 05:24 |
