Accumulation
Accumulation typically occurs after a downward trend, manifesting as a consolidation phase where major market players build their positions.
Key features include:
- Takes place after an extended downtrend.
- The price fluctuates within a range, indicating a balance between bulls and bears.
- There is an equal distribution of candles in upward and downward price movements.
- The moving average stabilizes, with the price hovering around it.
- Volatility remains low.
Trend
Once the price breaks free from the accumulation phase, it transitions into a trend phase. This phase is marked by:
- Following the accumulation phase.
- The price climbs to higher highs and dips to higher lows.
- Impulse movements last longer than corrections.
- The short-term moving average surpasses the long-term one (e.g., 10 MA above 20 MA).
- The price trades above the 200 MA.
- Volatility escalates in the trend’s later stages as more traders get involved.
Distribution
Distribution usually follows a trend phase and resembles a consolidation period, where major market players start to offload their positions. The distribution phase is characterized by:
- Occurs after an extended uptrend.
- The price remains within a range, reflecting a balance between bulls and bears.
- Candle distribution is similar in both upward and downward movements.
- The moving average stabilizes, with the price moving along it.
- Volatility spikes as many traders entered the market at the peak of the trend.
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