Bill Williams indicators
Accelerator Oscillator (AC)
Shows whether the market's driving force is speeding up or slowing down, often before the price changes direction.
The idea in plain words
Bill Williams' view: before the price turns, momentum changes; and before momentum changes, its acceleration does. AC measures that acceleration as the difference between the Awesome Oscillator and its own average.
How it is calculated
Awesome Oscillator minus its 5-period simple average. Bars are green when AC rises, red when it falls.
AC = AO − SMA(AO, 5)
AO = SMA(median price, 5) − SMA(median price, 34)How to use it
- Two green bars in a row above zero (or three below zero) are Williams' buy signals; the reverse for sells.
- Use it to time entries in the direction of the Alligator's trend.
Drawing conclusions
- A colour change is the earliest warning of a shift in momentum.
Example
During a pullback in an uptrend AC prints two consecutive green bars above zero: momentum is accelerating up again.
Prices in examples are illustrative.
Watch out for
- Early signals are also more often wrong; wait for confirmation from price.
A little history
Bill Williams, "New Trading Dimensions" (1998).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.