Accumulation and Distribution Patterns Part 3

Accumulation and Distribution Patterns Part 3

The third and final chapter of the Accumulation and Distribution Patterns theory

5:30 – REACCUMULATION + REDISTRIBUTION

ReAccumulation 

• Happens after the price explosion markup phase.
• Price will move sideways inside of a range before a breakout to the upside on continued demand.
• Example 20k ReAccumulation:
  • Mark out the range high and range low.
  • Trade the range until it breaks even though we have a bullish bias.
  • Monitor MS, CVD and breakout volume + delta + OI.

ReDistribution

• Happens after the price implosion markdown phase.
• Price will move sideways inside of a range before a breakout to the downside.
• Example 69k ReDistribution:
  • Mark out the range high and range low.
  • Trade the range until it breaks even though we have a bearish bias.
  • Look for a SFP/Failed Auction of the range high.

 18:16 – REACCUMULATION 

• Daniel does not look for all of the labels and stages but keeps it simpler:
  • He acknowledges we broke out of a major accumulation schematic and price should be going much higher.
  • When the range starts to form, he trades the range.
  • Monitor volume, OI, delta and market structure.
• Primary things to watch for: 
  • Market structure:
    • Don’t want to see the range low lost with more than a wick/Failed Auction.
    • If we break to range low there are no long opportunities unless a reclaim back into the range.
  • Delta (CVD).
  • Market sentiment.
  • You don’t want to see the overall low of the range lost on high negative delta => ReAccumulation will be invalidated.

25:05 –REDISTRIBUTION

• Daniel does not look for all of the labels and stages but keeps it simpler:
  • He acknowledges we broke out of a major distribution schematic and price should be going much lower.
  • When the range starts to form, he trades the range.
  • Monitor volume, OI, delta and market structure.
• Primary things to watch for: 
  • Market structure 
    • Don’t want to see the range high lost with more than a wick/Failed Auction.
    • If we break to range high there are no short opportunities unless a reclaim back into the range.
  • Delta (CVD).
  • Market sentiment.
  • You don’t want to see the overall high of the range reclaimed on high positive delta => ReDistribution will be invalidated.

28:04 – INTRICACIES

• Nothing is black and white.
• Perfect accumulation range can still be invalidated after trading it for a year => always be open for changes.
• Risk management remains key. 
• The schematics give us high probabilities of breakout direction, but never a 100% certainty.
• Always use these in combination with order flow / market structure.
• Don’t disregard all other technical analysis => if so, you will fall into many Market Maker traps (making people bullish at highs, and bearish at lows).
• Daniel loves to use the schematics in his swing trading idea, but he will always be firstly open to being wrong, and secondly and most importantly not use this alone.

35:12 - EXAMPLES