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.