The accumulation swing index (ASI)

The accumulation swing index (ASI) is a variation of Welles Wilder's swing index. It plots a running total of the swing index value of each bar. The swing index is a value from 0 to 100 for an up bar and 0 to -100 for a down bar. The swing index is calculated by using the current bar's open, high, low and close, as well as the previous bar's open and close. The swing index is a popular tool in the futures market.

The Swing Index alone doesn't provide much in the way of signals. It should be used in conjunction with the Accumulative Swing Index. The Accumulative Swing Index is a cumulative total of the Swing Index. The Accumulative Swing Index provides a numerical value that quantifies price swings.

Usage:

It defines short-term swing points. It indicates the real strength and direction of the market. The accumulative swing index is used to gain a better long-term picture than using the plain swing index, which uses data from only two bars. If the long-term trend is up, the accumulative swing index is a positive value. Conversely, if the long-term trend is down, the accumulative swing index is a negative value. If the long-term trend is sideways (non-trending), the accumulative swing index fluctuates between positive and negative values. This indicator is used to analyze futures but can be applied to stocks as well.

ASI will give the technician numerical price swings that are value quantified, and it will show short-term trend turnarounds. A breakout is indicated when the accumulative swing index exceeds its value in the period when a previous significant high swing point was made. A downside breakout is indicated when the value of the accumulative swing index drops below its value in a period when a previous significant low swing point was made.