The Accelerator Oscillator (AC) is indicator that has been made up by Bill Williams as the development of the Awesome Oscilliator. It shows the difference between the Awesome Oscillator and the 5-period moving average, and thus it reveals the speed of change of the Awesome Oscillator, which can be useful to find trend reversals before the Awesome Oscillator does.
There are some current rules of the Accelerator Oscillator – If AC is higher than the nought line, it is supposed that acceleration will continue the upward movement. The same rule could be applied for downward movements if the AC is below the nought line.
Indications of an upward movement on the market could be pointed by two green bars, in a position one after the other, and the AC is above the nought line.
Signals for a downtrend is revealed by two red bars, set one after the other, when the AC is below the nought line.
A more aggressive approach to the AC interpretation looks for signals, while the AC oscillator is on the opposite side of the nought line. This is for traders who consider a long position – below the nought line, and the opposite in the case of short positions. In this case an additional bar is needed for confirmation. As a final result, when the AC is below the nought line and the trader plans opening a long position, there should be at least three green bars coming out below the nought line.
However, when the AC is above the nought line and the investor considers to open a short position, three red bars showing above the nought line should be required as confirmation.
How to use the Accelerator Oscillator with your MetaTrader:
- Select a chart where the Accelerator Oscillator should be added.
- Go to: Insert – Indicators – Bill Williams – Accelerator Oscillator.
- Accelerator Oscillator will be automatically displayed below the chart.