To understand whether accumulation (active position building) or distribution (position unloading) is occurring, several factors should be considered:
1. Volume analysis in conjunction with price
• If volume increases while price remains sideways → Accumulation (large players buy the asset, preventing the price from rising significantly).
• If volume increases while price also rises → Impulse movement (if the rise continues – it may indicate a bullish trend).
• If volume increases while price starts to fall → Distribution (large players sell the asset, locking in profits).
• If volume decreases while price continues to rise → There may be a trap for buyers (without volume support, the rise may be false).
2. Indicators for confirmation
• OBV (On-Balance Volume) – if OBV rises along with the price → accumulation; if it falls while the price rises → distribution.
• Candle analysis – if long upper shadow candles with high volume appear at resistance levels → unloading is likely occurring.
3. Market context
• If the price remains sideways with increased volume before a strong movement → accumulation may be happening before the breakout.
• If high volumes appear during strong rises, after which the price reverses → this may indicate distribution.
Happy trading! More useful information to come!