How Acceleration/ Deceleration Indicator works
This tool yield results through 0.00 level median fluctuations that correspond to the balance of the driving forces of the market. Positive values imply a bullish trend, while negative values suggest a bearish trend. The direction of this indicator changes even before an actual market trend shift. Hence, this tool helps traders detect trend change or market conditions.
To interpret the indicator tool, keep track of the value and color lines as:
- Two green columns higher than zero signal the trader to take a long position.
- Two red columns lower than zero suggests the trader take a short position.
The AC bar chart operates using the given formula:
AO = SMA (media price, 5) – SMA (median price, 34)
AC = AO – SMA (AO, 5)
The Awesome Oscillator (AO) is subtracted from a 5-period moving average of the Awesome Oscillator.