Accumulation Area

AAA

DEFINITION of 'Accumulation Area'

A price range in which investors typically purchase shares of a particular stock. The accumulation area is determined by looking at the volume and its corresponding price. It appears as a rectangle with a price line bouncing up and down between the upper and lower limits. According to technical analysts, stocks that hit the accumulation area presents an opportunity to buy because it is expected to attract more demand.

INVESTOPEDIA EXPLAINS 'Accumulation Area'

Investors use technical analysis techniques, such as the on-balance volume (OBV) method, to detect the momentum of a stock. If a stock doesn't seem to fall below a certain price, this can be a sign that the stock is in an accumulation area and may be more likely to attract more investors, allowing traders who see the trend to profit from increased buyer interest.

RELATED TERMS
  1. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
  2. Technical Analysis of Stocks and ...

    The academic study of historical chart patterns and trends of ...
  3. Zone Of Support

    A price zone in which a stock finds support and begins to trade ...
  4. Bollinger Band

    A band plotted two standard deviations away from a simple moving ...
  5. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
RELATED FAQS
  1. How is accumulation area calculated?

    An accumulation area does not have a precise calculation. Accumulation areas are identified on price/volume charts as rectangular ... Read Full Answer >>
Related Articles
  1. Active Trading Fundamentals

    Simple Moving Averages Make Trends Stand Out

    The moving average is easy to calculate and, once plotted on a chart, is a powerful visual trend-spotting tool.
  2. Active Trading Fundamentals

    Charting Your Way To Better Returns

    Learn about the powerful hybrid techniques that take advantage of both technical and fundamental analysis.
  3. Technical Indicators

    On-Balance Volume: The Way To Smart Money

    This momentum indicator was designed to predict when major market moves would occur.
  4. Trading Strategies

    Momentum Indicates Stock Price Strength

    Momentum can be used with other tools to be an effective buy/sell indicator.
  5. Active Trading

    Peak-and-Trough Analysis

    Prices never move in straight lines, so it's time to learn about this powerful trend-following technique.
  6. Active Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  7. Stock Analysis

    Will Ride Sharing Crush Medallion Financial?

    Driving a taxi cab is far from a glamorous business, but in many areas of the country, it's a business that involves a lot of money.
  8. Stock Analysis

    What Is Marvell's Mobile Progress?

    Although Marvell is far from the top in the processor market, it plans to keep investing in this business even as the competitive environment gets tougher.
  9. Stock Analysis

    Is SodaStream Ready For A Come Back?

    It's not easy to be a SodaStream investor. The once-fizzy market has gone flat, shedding roughly three-quarters of its value since peaking two summers ago.
  10. Stock Analysis

    Is Union Pacific Still A Good Dividend Stock?

    It is impossible for a competitor to secure enough right-of-way real estate and cost advantages to compete with U.S. Class I railroads, like Union Pacific.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center