When the volumes traded in a share start to pick up while the share price moves sideways or upwards, this is known as an “accumulation phase”. It indicates that the share is becoming stronger. After a period of accumulation, the supply of shares will sooner or later be exceeded by the demand and this may send the share price shooting upwards rapidly. An accumulation phase is a sideways market where the smart money is accumulating the share because they expect it to rise in due course.
You can see in the above chart that the share falls and then enters a period of sideways movement, which is associated with increased volumes traded. The raised volumes are caused by smart money accumulating the share. It is sometimes also called an “island” and it is the opposite of a “distribution area”.All information and data contained within the PDSnet Glossary terms is for informational and educational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet glossary terms is based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any glossary term for any reason.« Back to Glossary Index