Acceleration/Deceleration Technical Indicator (AC) measures acceleration
and deceleration of the current driving force. This indicator will change
direction before any changes in the driving force, which, it its turn, will change
its direction before the price. If you realize that Acceleration/Deceleration is a
signal of an earlier warning, it gives you evident advantages.
The nought line is basically the spot where the driving force is at balance with
the acceleration. If Acceleration/Deceleration is higher than nought, then it is
usually easier for the acceleration to continue the upward movement (and
vice versa in cases when it is below nought). Unlike in case with Awesome
Oscillator, it is not regarded as a signal when the nought line is crossed. The
only thing that needs to be done to control the market and make decisions is
to watch for changes in color. To save yourself serious reflections, you must
remember: you can not buy with the help of Acceleration/Deceleration, when
the current column is colored red, and you can not sell, when the current
column is colored green.
If you enter the market in the direction of the driving force (the indicator is
higher than nought, when buying, or it is lower than nought, when selling),
then you need only two green columns to buy (two red columns to sell). If the
driving force is directed against the position to be opened (indicator below
nought for buying, or higher than nought for selling), a confirmation is needed,
hence, an additional column is required. In this case the indicator is to show
three red columns over the nought line for a short position and three green
columns below the nought line for a long position.
AC bar chart is the difference between the value of 5/34 of the driving force
bar chart and 5-period simple moving average, taken from that bar chart.
AO = SMA(median price, 5)-SMA(median price, 34)
AC = AO-SMA(AO, 5)
SMA — Simple Moving Average;
AO — Awesome Oscillator.