Price is the last element that changes. Before the price changes, the driving force of the market changes, and before the driving force changes its direction, the acceleration of the driving force must slow down and reach zero. Then it begins to accelerate in the opposite direction until the price begins to change its direction.
The technical Accelerator / Decelerator Oscillator (AC) measures the acceleration and deceleration of the current driving force. This indicator will change direction before changing the driving force, and it will in turn change its direction before the price change. Understanding that the AU is an earlier warning signal gives obvious advantages.
The zero line is, in essence, the place where the driving force is balanced with acceleration. If the Acceleration Deceleration (AC) is above zero, it is usually easier for the acceleration to continue driving upward (and vice versa, when it is below zero). Unlike the awesome oscillator, the intersection of the zero line is not a signal. The only thing that needs to be done to control the market and make decisions is to monitor the color change. To avoid serious reflection, it is necessary to remember: it is not advisable to buy with the help of the AU when the current column is painted red, and it is undesirable to sell when the current column is painted green.
If you enter the market in the direction of the driving force (the Acceleration / Deceleration indicator is above zero, when buying, or it is below zero, when selling), then only two green columns are needed to buy (two red columns to sell). If the driving force against the opening position (indicator below zero, when buying, or above zero, when selling), you need confirmation, so an additional column is required. In this case, it is necessary that the indicator shows three red columns above the zero line, for the short position and three green bars below the zero line, for the long line.
Calculation of Accelerator / Decelerator Oscillator – AC
The AC histogram is the difference between the 5/34 histogram of the driving force and the 5-period simple moving average taken from this histogram.
MEDIAN PRICE = (HIGH + LOW) / 2
AO = SMA (MEDIAN PRICE, 5) – SMA (MEDIAN PRICE, 34)
AC = AO – SMA (AO, 5)
MEDIAN PRICE – the median price;
HIGH – the maximum price of a bar;
LOW – the minimum price of a bar;
SMA – simple moving average;
AO – indicator Awesome Oscillator.