When the market presents a lateralization situation (or consolidation), it’s always a difficult task to define whether there is either a distribution or an accumulation process happening under the market’s surface. The Accumulation/Distribution (WAD) indicator has been created with that in mind.
What is accumulation?
Accumulation is a lateral movement that precedes a bullish tendency. It’s the phase where people with high quality intel start buying crypto assets – when most traders haven’t even noticed that a crypto asset has appreciation potential.
Identifying the accumulation phase can be a great move, considering that through this strategy the operator can be alert to the start of a bullish tendency before it even begins.
What is distribution?
On the other hand, distribution is a lateral movement that precedes a bearish tendency. During a distribution, the people with access to high quality intel start selling accumulated crypto assets. A lot of times, there are insiders with harmful information about the company which still haven’t been disclosed.
Identifying the distribution phase can be an equally huge advantage because, this way, the trader can be alert to the start of a bearish tendency before it even begins.
Accumulation/Distribution Williams (WAD) is a technical indicator that measures the buy and sell pressures and thus issues signs that help the trader to identify whether the market is in accumulation or distribution.
Adding it to your platform
The Accumulation/Distribution Williams (WAD) indicator is available in the Basic, Standard and Pro versions of Vector and it can be added to your graph through the following steps:
Right-click the graph, select “Add Indicator” and type “Accumulation/Distribution Williams”.
Interpretation
WAD works in divergences, that is, when this indicator’s direction is opposite to the prices’ direction. It usually anticipates the price movement.
The key to a good analysis of Accumulation/Distribution Williams is to pay attention to the strong signals, that is, the big signals of discrepancies between the price and the indicator’s charts.
In the image above, the market was in accumulation, preceding a bullish movement that would come after.
In this case, the indicator diverged from the price chart, signaling that the market was in accumulation, warning that there was a big probability of a bullish tendency arising.
We can see this in the interval in which the price chart is between the two yellow lines and the indicator was signaling rising funds (the red line).
Final remarks
When the market is in congestion, it’s always difficult to foresee what is the direction probability for the next price movement. Is the market accumulating or distributing? WAD is excellent to help us find the answer for that.
Accumulation/Distribution Williams anticipates the prices movements, generating divergences in which many cases are clearly visible and efficient. This indicator can be an element that naturally adapts itself to different trading styles.
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