AC - Accelerator/Decelerator Oscillator
Acceleration/Deceleration Technical Indicator (AC) is introduced by Bill Williams. Some people said it is from his book Trading Chaos. But seems a rumor, but anyway, Fractal is the highlight point of that book.
The main purpose of this indicator is represent the direction of driving force.
When the current histogram higher than the previous one, it will be colored green and imply an up trend would follow.
When the current histogram lower than the previous one, it will be colored red and imply an down trend would follow.
There is also a zero line signifies the balanced of two driving force. Above 0, the price would move upwards faster and easier (and vice versa in cases when it is below 0).
- Enter the market when the color changed. Judge on the current inter bar or at the end of the previous.
- Enter when histogram across 0 line.
Similar for Exit.
Logic and Calculation
- 1. Count the difference of two Simple Moving Average, AO.
- AO = SMA(Median Price, 5) - SMA(Median Price, 34)
- 2. The result is the difference between AO and the Moving Average of AO
- AC = AO - SMA(AO, 5)
Substitute AO with DIF would be more self-explanatory. The only reason to use AO is that the AO (Can't find indicator/ao-awesome-oscillator to include!) also introduced by Bill Williams.
- DIF = SMA(Median Price, 5) - SMA(Median Price, 34)
- AC = DIF - SMA(DIF, 5)
Account for this indicator. It's so called AC. Its moving average periods are fixed (5-34-5).
I'm also providing a flexible AC indicator which allow user custom the ma settings: