The accumulative swing index is entirely based on swing index or a swing system which is bought to make use of breakout pattern. Usually, ASI is used to validate and then verify the trend line breakouts on the cost charts. It also helps to confirm the long-term trends and trend line breakout.
It is a useful tool for the traders as it assists them to calculate the movement of the extending over a specified duration of time by weighing the bars comprising costs from different aspects such as closing rate, opening rate, low point and high point through a particular period.
The curve of the accumulative swing index seem to bend towards positive; it indicates the long-term market movement. On the other hand, when it reflects unfavourable figures, then it points towards the long-term movement of being lower.
The ASI comes handy when it comes to the matter of getting a long term picture when compared to plain swing index wherein data is used from two bars. Well, we have already discussed the positive and negative aspects, and the third possibility is that long-term leaning goes sideways and it oscillates between favourable values and those who are not.
How to elucidate ASI indicator?
ASI trading indicator details –
- Positive value – uptrend
- A negative value – downtrend
- Trend line breakout – It validates the breakthrough of the cost chart.
When the long-term trend is upside, the ASI has a positive value; if it is down, then it appears as a negative value. On the other hand, during the sideways of the changing market, then ASI indicators lie between positive and negative value. ASI is mainly used to confirm or else deny the trend line breakouts.