Acceleration Oscillator (AC) indicator [Oscillator]
Acceleration/Deceleration indicator (Acceleration Oscillator, abbreviated AC) - as it is easy to guess from the name, the technical indicator of the oscillator type, which displays to the trader the processes of acceleration and deceleration of the current driving force of the instrument.
It is assumed that to change the direction of the price chart requires a change in the driving force of the market, which must first slow its current movement, and then give a new impulse in the opposite direction. Acceleration Oscillator indicator was developed by Bill Williams to measure the direction and activity of a given market driving force, which in turn changes the direction of price.
Acceleration Oscillator indicator is standard for MetaTrader 4 trading terminal.
The zero line of the Acceleration Oscillator indicator
In contrast to of the Awesome Oscillator indicatorThe Acceleration Oscillator zero line is where the momentum is in balance with acceleration, so using it as a signal line is not recommended. However, if the AC indicator is above zero, it is easier for the acceleration to continue the upward movement, and vice versa.
Forex Trading Signals AC Indicator
In addition, the location and size of AC bars may also not be of concern to the trader. The main thing to watch is the color of the indicator.
Buy signal occurs if the color of the indicator is green, and if it is below zero, then buy on the fourth consecutive green bar, if higher - on the third.
For purchase transactions it is necessary that the Awesome Oscillator is colored red. Sell on the fourth consecutive red bar when the indicator is above zero, and on the third when it is below zero.
Formula for calculating the AC indicator
MEDIAN PRICE = (HIGH + LOW) / 2,
AO = SMA (MEDIAN PRICE, 5) - SMA (MEDIAN PRICE, 34),
AC = AO - SMA (AO, 5),
Where:
- MEDIAN PRICE is the median price;
- HIGH - the maximum bar price;
- LOW - the minimum bar price;
- SMA - simple moving average;
- AO - Awesome Oscillator indicator.