The Accelerator Oscillator is designated with an aim of predicting signals provided by the Awesome Oscillator
Rule of thumb
Signals provided by the Accelerator Oscillator can be filtered with the usage of other
technical analysis indicators for improved results
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The Accelerator Oscillator has been developed by Bill Williams as the development of the Awesome Oscillator. It represents the difference between the Awesome Oscillator and the 5-period moving average, and as such it shows the speed of change of the Awesome Oscillator, which can be useful to find trend reversals before the Awesome Oscillator does.
Interpretation of the Accelerator Oscillator (AC) is based on the following rules - If AC is higher than the nought line, it is considered that acceleration will continue the upward movement. The same rule applies for downward movements if the AC is below the nought line.
Signals of a market rise are confirmed by two green bars (one after the other) and the AC is above the nought line.
Indication of a market decline is confirmed by two red bars (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 (for traders considering a long position - below the nought line, and the opposite in the case of short positions). In such a situation an additional bar would be necessary for confirmation. As a result, when the AC is below the nought line and the investor is considering opening a long position, there should be at least three green bars appearing below the nought line.
On the other hand, when the AC is above the nought line and the investor wants to open a short position, three red bars appearing above the nought line would be required as confirmation.
How to use it with MetaTrader 5:
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 by MetaTrader 5.