Accumulation Area

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.

BREAKING DOWN '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.

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RELATED FAQS
  1. How is accumulation area calculated?

    Explore the use of accumulation areas in the analysis of traded securities. Learn about on-balance volume and its role in ... Read Answer >>
  2. How do I build a profitable strategy when spotting a rectangle pattern?

    Understand how to utilize the rectangle chart pattern to establish long- and short-term trading strategies, including optimal ... Read Answer >>
  3. How do I use On-Balance Volume (OBV) to create a forex trading strategy?

    Read about some of the basic ways On-Balance Volume indicators can be used by forex traders to measure volume trends and ... Read Answer >>
  4. What is a common strategy traders implement when using On-Balance Volume (OBV)?

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  5. How do I Implement a forex strategy when spotting a Rectangle Pattern?

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