Understanding the Accumulation Swing Index (ASI) for MetaTrader 5

The Accumulation Swing Index (ASI) is a powerful tool developed by Welles Wilder to help traders navigate the often turbulent waters of price fluctuations. Wilder famously noted, "Somewhere amidst the maze of Open, High, Low, and Close prices is a phantom line that is the real market." The ASI is designed to help us uncover that phantom line.

In his book, "New Concepts in Technical Trading Systems", Wilder elaborates on the ASI, stating: "When the Index is plotted alongside the daily bar chart, the trend lines on the ASI can be compared with those on the bar chart. For traders adept at drawing meaningful trend lines, the ASI can serve as a valuable confirmation tool for trend-line breakouts. Often, false breakouts on bar charts won't be validated by the ASI's trend lines, thanks to its focus on closing prices. This means that a quick price spike during the day won't skew the index too much."

The ASI aims to reflect the "real market," making it closely aligned with actual price movements. This characteristic allows traders to apply traditional support and resistance analysis to the ASI. Common strategies include watching for breakouts, identifying new highs and lows, and spotting divergences. Here are some key features of the ASI highlighted by Wilder:

• It provides quantitative insights into price shifts;
• It identifies short-term turning points;
• It offers clarity on the market's true strength and trend.

Accumulation Swing Index Indicator

Calculation:

Where:

• SI(i) - current value of the Swing Index;
• SI(i-1) - value of the Swing Index from the previous bar;
• CLOSE(i) - current close price;
• CLOSE(i-1) - previous close price;
• OPEN(i) - current open price;
• OPEN(i-1) - previous open price;
• R - a parameter derived from a complex formula based on the ratio of the current close price to the previous maximum and minimum;
• K - the greater of two values: (HIGH(i-1) - CLOSE(i)) or (LOW(i-1) - CLOSE(i));
• T - the maximum price change during the trading session;
• ASI(i) - current value of the Accumulation Swing Index.