Accumulation Swing Index (ASI)

How the Software works

Wales Wilder, creator of ASI, once said: "Somewhere amidst the maze of Open, High, Low and Close prices is a phantom line that is the real market." This technical indicator shows that very useful "phantom line". In other words, it is widely accepted that the ASI shows "real prices" in markets. As the ASI line indicates real prices, traders may use classical technical analysis methods (Eg: support/resistance, tend lines, breakouts etc) on the indicator itself.

Positive ASI Values (0 to 100) show an uptrend market whereas negative values (0 to -100) show a downtrend market. A trend-line breakout on ASI just validates a corresponding breakout on the price chart.

Calculations

ASI is based on Swing Index (SI) values which are in turn dependent on close prices of current and previous bars. Swing Index (SI) values are also based on certain other coefficients derived from other complex calculations which are out of the scope here.

SI(i) = 50*(CLOSE(i-1) - CLOSE(i) 0,5*(CLOSE(i-1) - OPEN(i-1)) 0,25*(CLOSE(i) - OPEN(i)) / R)*(K / T)
ASI(i) = SI(i-1) SI(i)

Where: SI (i) — current value of Swing Index technical indicator;
SI (i - 1) — stands for the value of Swing Index on the previous bar;
CLOSE (i) — current close price;
CLOSE (i - 1) — previous close price;
OPEN (i) — current open price; OPEN (i - 1) — previous open price;
R — the parameter we get from a complicated formula based on the ratio between current close price and previous maximum and minimum;
K — the greatest of two values: (HIGH (i - 1) - CLOSE (i)) and (LOW (i - 1) - CLOSE (i));
T — the maximum price changing during trade session;
ASI (i) — the current value of Accumulation Swing Index.

Configurable options

In this indicator the colors for uptrend values and downtrend values can be changed. Default colors are green for an uptrend and red for a downtrend. The visualization is allowed in all time frames, and it can run in all time frames.

Observations and conclusions:

As a standard practice, the moving averages are calculated as an average of High and Low prices. These can not be configured from inputs window. As this indicator is totally based on moving averages, this indicator inherits all its advantages and disadvantages.

Developed by Welles Wilder, who once said: "Somewhere amidst the maze of Open, High, Low and Close prices is a phantom line that is the real market." This indicator attempts to show this phantom as a line, cutting through the maze of highs, lows, and closes and indicating the real strength and direction of the market. Since the ASI attempts to show the "real market," it closely resembles price action, allowing analysts to use trend lines, breakouts, and other analysis tools on the ASI itself.

Developed to determinate the real price of a certain pair, this indicator quantifies parameters of price changing, shows the probable turning points of short-term changing and gives the possibility to understand the real power and trend of the market, as the indicator tends to reflect variance in price and volume.

When Accumulation/Distribution (A/D) starts growing, it is understood as a buying signal since the trading volume part is related to the upside price movement. On the contrary, a selling position can be started when the indicator begins to fall because the trading volume part is tightly connected with the downward price motion.

To filter the indicator, one only needs to draw support and resistance levels for the particular time frame under study in order to detect extreme readings, particularly in hourly or smaller time frames. When trading in bigger time frames, trend line breaks also provide interesting signals of trend change, but they are better if confirmed by pullbacks.