$ETH

What are accumulation areas 🚉

Accumulation areas are price levels or regions on the chart where large investors (funds, institutions, large traders) gradually and quietly purchase large quantities of the currency, in preparation for an upcoming bullish move.

The key characteristics of accumulation areas:

1. Relatively low price volatility: the price moves horizontally or within a narrow range for a period, indicating a lack of strong selling or buying pressure.

2. Increasing or stable trading volume: often, the trading volume starts to rise or remains stable at high levels during the fluctuation, indicating significant buying.

3. Strong price support: the price does not easily drop below certain levels, forming solid support.

4. Technical indicators supporting accumulation: such as a positive crossover in moving averages, or an increase in relative strength indicators (RSI) without a significant price increase.

⸻

How do you practically identify accumulation areas?

• Look at the price: is the price moving sideways or in a narrow channel for a period?

• Trading volume: is there an increase in volume while the price remains stable?

• Support levels: is the price testing a specific support level multiple times without breaking?

• Momentum indicators: are there signs of selling weakness or the beginning of buying strength? (e.g., Doji candles, bullish engulfing)

• Using indicators like OBV (On-Balance Volume): to see if buying volume is greater than selling volume.