Support - Resistance

Accumulation and Distribution

Accumulation and distribution indicate who is in control of the market and often signal a reversal.

Accumulation

Accumulation is when the market is controlled by buyers.
A down-trend that stalls while volume remains high signals that accumulation is taking place. Sellers have lost control to buyers and a reversal is likely.

An Accumulation Day occurs when either:

Volume increases (compared to yesterday) and closing price moves higher, or
After trending downwards, there is little or no price movement and an increase in volume.

Distribution

Distribution is when the market is controlled by sellers.
An up-trend that stalls while volume remains high is a sign that distribution is taking place. Buyers have lost control to sellers and a reversal is likely.

A Distribution Day occurs when either:

Volume increases (compared to yesterday) and closing price moves lower, or
After trending upwards, there is little or no price movement and an increase in volume.

Breakouts

When price is trading in a range, volume may indicate in which direction a breakout is most likely to occur:

Higher volume at peaks means that an upward breakout is more likely
Higher volume at troughs indicates that a downward breakout is more likely

Use volume to confirm the breakout:

High volume indicates a healthy breakout.
Low volume indicates weakness.