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Home / Forex Indicators / Chaikin's Volume Accumulation
 
The Volume Accumulation Oscillator depicts the cumulative volume fixed by the distinction between the close and the middle point of the day's range in currency trading. This volume indicator addresses some of On Balance Volume's shortcomings. As seen from the name, it was developed by Mark Chaikin.
   
Volume Accumulation in currency trading uses the connection between the closing price and the mean price to appoint a proportion to the volume (if compared to the OBV indicator (On Balance Volume which appoints all the day's volume to the sellers if it closes down or to the buyers if a security closes up).

Where OBV assigns all of a day's volume a positive or negative value, Volume Accumulation takes into consideration only a percentage of the volume as positive or negative (depending on where the close is connected to the average price of the day).


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In currency trading, the only time the whole day's volume is appointed a positive value is when the close is the same as the day's high.
 
 
The opposite concerns for a close at the day's low. Use the Volume Accumulation Oscillator as well as the OBV in currency trading, and the volume will confirm a trend.

The formula for Chaikin's Volume Accumulation is:
VAC = Volume * ( Close - High + Low / 2 )

 

A rising price trend in currency trading will be confirmed by a rising VA line. An uptrend paired with a rising Volume Accumulation line is considered bullish while a Volume Accumulation line that deviates from the price shift direction should warn of a near-term price correction.

In currency trading, we advise you to test this indicator in demo account trading before using it in real account.

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