Acceleration / Deceleration Oscillator (AC) measures the current momentum speed. This is the first place where changes become visible, then the momentum (AO) changes and then price changes.Acceleration / Deceleration Oscillator (AC) is usually shown as a histogram measuring the difference between 5/34 momentum histogram (Awesome Oscillator) and a 5-bar simple moving average on the Awesome Oscillator.
Unlike the Awesome Oscillator, Acceleration / Deceleration Oscillator (AC) do not create a signal when crossing zero line. However, we still never buy if a histogram bar is red and never sell if bar is green.
Buy above the zero line / sell below the zero line
A buy above the zero line signal is generated when there are two consecutive green histogram bars (a green histogram bar is a bar whose high is higher than the preceding bar's high):The historgam is above the zero line. Place a Buy Stop one tick above the high of the price bar that corresponds to the second highest high (“c”).
A sell below the zero line signal is generated when there are two consecutive red histogram bars (a red histogram bar is the bar whose low is lower than the preceding bar's low). The historgam is below the zero line. Place a Sell Stop one tick below the low of the price bar that corresponds to the second lowest low (“c”).
Buy below the zero line / sell above the zero line
If the histogram is below the zero line, a buy signal is generated when there are three consecutive green histogram bars. Place a Buy Stop one tick above the high of the price bar that corresponds to the third highest high (“d”).If the histogram is above the zero line , a sell signal is generated when there are three consecutive red histogram bars:
Place a Sell Stop one tick below the low of the price bar that corresponds to the third lowest low on the histogram (“d”).
If histogram “b” or “c” bar crosses the zero line, then histogram “c” bar becomes a signal bar, and there is no need to wait for the “d” bar to occur.
Important:
No matter what signal is created you:
- must ignore it until the first fractal buy or sell signal is triggered outside the Alligator's mouth.
- ignore signals that are not in the same direction as the first signal from fractal.
If Acceleration / Deceleration Oscillator generates a signal but the histogram changes its colour before the pending order is executed, then the signal has to be ignored and the order has to be deleted.
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