Accumulative Swing Index

The Accumulative Swing Index (ASI) is an indicator used to inspect the long-term trend by comparing the bar chart. In particular, it exploits the OPEN, CLOSE, HIGH and LOW data of a particular period of time.

This index is a variation of  Welles Wilder’s Swing Index, which sums the individual values resulting from the Swing Index. The swing index gives a value from 0 to 100 if the bar is positive, a value from 0 to -100 if negative. The accumulative Swing Index is a variant that is used to have greater accuracy over the long term than the normal Swing Index which uses only two bars.

Basically when the ASI is positive it means that the long-term trend is positive, while when the ASI is negative the long-term trend is negative. Instead if the long-term trend were to record an absence of trend, the ASI fluctuates between positive and negative values. It is very useful since it provides a value to the oscillations and therefore gives a quantitative indication on the inversions that occur even in the short term.

When the ASI is drawn on the same graph as the daily bar chart, the trend lines drawn on the ASI can be compared to the trend lines drawn on the bar chart. For those who know how to draw trendlines, ASI can be an excellent tool to confirm trendline violations.

Often the false signs of trend lines traced on the bar charts will not be confirmed by the trend lines traced on the ASI. Since the ASI is a weighted average that gives more importance to the CLOSE price, a quick daily price deviation will not match the index.