ACCUMULATION SWING INDEX

Overview

The Accumulation Swing Index is a cumulative total of the Swing Index. The Accumulation Swing Index was developed by Welles Wilder.

Interpretation

Mr. Wilder said, "Somewhere amidst the maze of Open, High, Low and Close prices is a phantom line that is the real market." The Accumulation Swing Index attempts to show this phantom line. Since the Accumulation Swing Index attempts to show the "real market," it closely resembles prices themselves. This allows you to use classic support/resistance analysis on the Index itself. Typical analysis involves looking for breakouts, new highs and lows, and divergences.

Wilder notes the following characteristics of the Accumulation Swing Index:

  • It provides a numerical value that quantifies price swings.
     
  • It defines short-term swing points.
     
  • It cuts through the maze of high, low, and close prices and indicates the real strength and direction of the market.

Example

The following chart shows Corn and its Accumulation Swing Index.

You can see that the breakouts of the price trendlines labeled "A" and "B" were confirmed by breakouts of the Accumulation Swing Index trendlines labeled "A'" and "B'."

Calculation

The Accumulation Swing Index is a cumulative total of the Swing Index. The Swing Index and the Accumulation Swing Index require opening prices.

Step-by-step instructions on calculating the Swing Index are provided in Wilder's book, New Concepts In Technical Trading Systems.