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How to Trade With Accumulative Swing Index (ASI)

Quick Summary Accumulative Swing Index (ASI):

The Accumulative Swing Index (Wilder) is a cumulative total of the Swing Index. It is also analyzed using technical indicators, line studies, and chart patterns, as an alternative view of price action.

  • When both price and ASI are making higher peaks and higher troughs, the up trend is likely to continue.
  • When both price and ASI are making lower peaks and lower troughs, the down trend is likely to continue.
  • If during a trading range, the ASI is rising, then accumulation may be taking place and is a warning of an upward break out.
  • If during a trading range, the ASI is falling, then distribution may be taking place and is a warning of a downward break out.
  • The ASI Line only looks at the level of the close relative to the high-low range for a given period (day, week, month). The AD line ignores the change from one period to the next. With this formula, a security could gap down and close significantly lower, but the ASI Line would rise if the close were above the midpoint of the high-low range.
  • When price continues to make higher peaks and ASI fails to make higher peak, the up trend is likely to stall or fail. This is known as a negative divergence.
  • When price continues to make lower troughs and ASI fails to make lower troughs, the down trend is likely to stall or fail. This is known as a positive divergence.

How to Trade:

  • ASI has positive value as a result uptrend.
  • Whether it has negative value certainly downtrend.
  • When trend line breakout — validates a breakout on the price chart.
  • ASI moves between + and – values.
  • Scale from 0 to 100 probably an uptrend
  • Scale from 0 to -100 probably a down trend.
  • Identify support/resistance levels,
  • Trend lines and true market direction,
  • It is showing Swings high/low,
  • Similarly Breakout setups
  • Divergence between indicator and regular price charts.
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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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