ForexGen studies past price and volume changes in order to build up simulations on future price movements. ForexGen's analysts mainly make use of charts and financial formulas to gather enough information used in technical price speculations.
Accumulation distribution technical analysis is used by traders to confirm price changes by measuring the volume of sales.
The indicator is determined by the changes in price and volume.
Of the components, volume is a weighting factor for the change of price. In the equation, the higher the volume, the greater the contribution of the price change will be for the value of the indicator.
To derive meaning from the indicator, when the indicator grows in value, it can be translated as an accumulation of an asset, related to an bullish trend for the price.
In comparison, when the indicator drops in value, this can be translated as a distribution of the asset, and related to bearish price movement.
For technical analysts, discrepancies between the current price and the indicator can be some of the most profitable signals. For example, if the indicator is going up in value, and the price of the asset is decreasing, the divergence can be interpreted as a turnaround waiting to happen.
Accumulation/Distribution technical analysis indicator calculation:
A/D(i) =((CLOSE(i) - LOW(i)) - (HIGH(i) - CLOSE(i)) * VOLUME(i) / (HIGH(i) - LOW(i)) + A/D(i-1)
In which:
CLOSE(i) — closing price for a period
LOW(i) — minimum price for the period
HIGH(i) — maximum price for the period
VOLUME(i) — volume for the period
A/D(i-1) — Accumulation/Distribution indicator value for the previous period
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