You will never know for sure when an accumulation is occurring....no one puts up a sign....in fact the fewer people that know, the better. As anyone who also accumulates, could potentially be seen as 'future supply' (if they sell for profit later), and therefore their supply will need to be bought, at a much higher price, if an uptrend is to be maintained. So any professional traders who are accumulation, really don't want to 'carry' too many traders up with them, that is why price whipsaws, and has false starts etc. To flip out traders, and absorb or accumulate their supply.
When in a downtrend you see some decent 'potential' buying come in, and price then starts moving sideways (or price is finding it more difficult to keep pushing lower), you can start to suspect absorption or accumulation is starting to take place.
Particularly if the tell tail signs begin to happen more than once.
In some respects you are looking for anomalies that don't make reasonable sense (see the weekly chart below).
For indications of a potential looming breakout, when you see price accelerate higher (in this case within a trading range or potential accumulation zone), it will generally draw out increased supply (sellers). Price will usually then pull back a little as it absorbs this increased supply, then when the supply dries up and if price is still strong, it will breakout again. Now after price has come down and supply dries up, you will often see a bar which has increased volume, and wider spread, which stands up 'tall and proud'. This is often a sign that the pull back is over, and price is about to prepare to breakout again (if you keep an eye on the "Rav's Office' thread in the 'test' forum, I post examples fairly regularly (they don't always work at all, or straight away, depending on the circumstances, but following some day to day, will help you understand what happens).
This weekly chart shows a few of the anomalies I look for in a potential accumulation......
Finally, just be aware that this type of analysis is no guarantee of success, it just raises the probabilities, and help with the understanding of the markets.
And things can happen to change circumstances, especially in the small and micro cap markets, with devastating effect.
for example - a stock might be under a potential accumulation, then something happens to change the view of the company (in the eyes of the accumulator), and in response the accumulator just dumps the position they have been building, smashing price, and causing a widespread downbar.
