One of the less known tools of technical analysis that can be used on forex markets. Acceleration/deceleration (AC) was developed by succesful trader B.Williams to complement Awesome forex indicator. It does so, by comparing it to moving average, with short calculation period.
Anatomy of Acceleration/deceleration (AC) forex indicator
AC fluctuates around zero, which represents balanced market. Growing positive values are signalizing rising price and uptrend, negative values are sign of declining price (downtrend).
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Interesting feature of this forex indicator is, that is reacts to price even before trend reversal and therefore may serve as early warning system in forex strategy.
Using Acceleration/deceleration (AC) forex indicator
As indicators color changes, green indicates to avoid buy positions, while red to avoid sell positions.
Indicator crossing from negative values to positive values signalize uptrend continuation and vice versa for downtrend.
Indicator closing two of its bars after crossing central line, generally confirms new price direction. Signal reliability is improved, when confirmed with other tool such as Moving averages or alligator.
Finding suitable entry point. We can use accelerator within confirmed trend to find ideal entry point, once the correction is exhausted. In uptrend we will be looking for accelerator to close back above 0 line after correction. Good example: (Accelerator + Alligator forex strategy).