Accelerator Oscillator

The accelerator oscillator, also from Bill Williams, asks whether the awesome oscillator itself is rising or falling relative to its recent average. It is momentum of momentum, acceleration. A positive bar means AO is above its own 5-period average: momentum is speeding up relative to that average. It will cross zero before AO does, because a turn in the slope leads a turn in the level. That lead is small and noisy.

Williams used the colour change, and a rule about not buying when the accelerator is red against a red awesome oscillator, as a filter. Translated: do not fight a momentum that is both negative and still worsening. The useful core is the filter, not a standalone entry.

Accelerator turning positive while AO is already positive says an upswing in momentum is speeding up. It can be an add-on condition for a long that the trend already justifies. It should not be the only reason to buy.

Accelerator turning negative while AO is negative says the decline in momentum is speeding up. As an exit or a filter against new longs, that is coherent. As a short in a bull market, it will fire on every dip.

Trading AC crosses as a complete system. It is a derivative of a derivative of midpoint averages. The noise is real. Also counting AO and AC as independent evidence.

Lead time versus AO is a few bars and is unstable. Anyone who needs an earlier signal can also just look at the price. Acceleration does not solve the lag of the 34-period average underneath.