What is an Accumulation Area?

The accumulation area is a form of charting that presents sideways movement of stock prices in the market. It is characterized with stock patterns and movement of stock prices that is important when making investment decisions in the stock market. This area presents stock patterns that indicate whether a stock is selling at a high, low or equilibrium level. The goal of every investor is to make purchases in the accumulation area. 

The sideways movement of stocks is also detected by analyzing the accumulation area. Also, by analyzing the accumulation area investors are able to detect fluctuations in the trading volume of stocks as well as the differences in stock price. In previous times, only professionals in the finance industry, brokers and finance personnel can analyze the accumulation area effectively, however, the availability of online tools and materials has given investors access to the chart and its analysis. Understanding a market chart and movements of the chart is crucial to investors, it helps them decide the appropriate time to make sales to purchases. Failure to recognize and accurately interpret chart movements as to whether a stock is in the accumulation zone or the distribution zone can be fatal to investors. Experienced and wise investors pay more attention to charts movement, especially as the economy moves in a particular direction. In most cases, accumulation area work better in periods of relative stability than instability.