Accumulation/Distribution Silver Technical Analysis & Accumulation/Distribution Trading Signals

Developed by Marc Chaikin

This silver technical indicator is used to assess the cumulative flow of money into and out of silver.

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 xagusd trading price. (Volume precedes xagusd trading price).

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

Interpretation

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

UpSilver Trading Trend

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

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

DownXAGUSD Trading Trend

If the xagusd trading price on a silver chart is falling then the AD should also be falling. This shows that the xagusd price move is being supported by volumes and the move downwards has strength behind it.

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

Silver Trading Technical Analysis & How to Generate Trading Signals

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

From chart above we can separate the chart into three parts, part A, B & C.

A - Upwards silver trendline on chart as well as on the Accumulation/Distribution

B - Downwards silver trendline on chart as well as on the Accumulation/Distribution

C - Upwards silver trendline on chart as well as on the Accumulation/Distribution

As long as the xagusd trading price & the indicator are moving in the same direction then the xagusd price move has enough momentum to continue heading in that direction as shown above

XAGUSD Trend-Line Break

From the above chart we can see that once the silver trend line on the AD was broken then the xagusd trading price silver trend line was also broken.

Looking at the chart below we have added vertical lines to represent the points where the silver trend lines were broken, both on the xagusd price chart and the indicator.

Comparing the silver trend lines on the indicator & the xagusd trading price those of the AD were broken before those of the chart. This is because volume always precedes xagusd trading price.

Trading Signals

Exit

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

Entry

Once the silver 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's always best to wait for a confirmation signal.

A confirmation signal is considered complete once both the indicator & the xagusd trading price breaks both their silver trend lines.

Entry Signal Generated by Silver Trend Reversal