What is Accumulation & Distribution?
Accumulation & Distribution is simply that in accumulation buyers are in control of the market and the price will be bought up throughout the trading period. Distribution on the other hand, means that sellers are in control and the asset will be sold off throughout the trading period.
Example of Accumulation & Distribution
Looking at the monthly time frame of ETH (Ethereum) we can see 3 clear accumulation & distribution zones. The zone of accumulation is drawn between $275 & $303, where the 2019 bull market was originally rejected off of. Between $303 and $1110, there are no monthly levels of support/resistance let alone accumulation or distribution zones. This move upwards happened in such a quick manner, which should’ve been expected due to the lack of major resistance levels. The two monthly zones of distribution occur between $1110 – $1200 & $1373 – $1420.
How to Identify Levels of Accumulation & Distribution
Levels of Accumulation are identifiable after a period of capitulation selling, gearing up for the next wave up. Accumulation zones are often found at the two daily, weekly, or monthly levels of support.
Levels of Distribution are identifiable after a period of massive buying, gearing up for the next sell off. Distribution zones are often found at two well-respected levels of resistance.