Tuesday, April 24, 2012

Acceleration Bands

Acceleration Bands Quick Summary

Breakout outside Acceleration bands suggest a beginning of a strong rally or a sell-off.

Closing inside the bands afterward signals about the end of a rally or a sell-off.

The idea behind Acceleration Bands indicator

Acceleration Bands principal use is in finding the acceleration in currency pair price and benefit as long as this acceleration preserves.

How to interpret Acceleration bands indicator

Acceleration bands are set as an envelope around a 20 period simple moving average on equal distance from it. Headley, the inventor of Acceleration Bands indicator suggests using them on weekly and monthly time frames to determine price acceleration breakouts (breakouts outside the bands).

When Acceleration  Bands are used for smaller time frames, upper and lower bands are treated as levels of possible support and resistance.

How to trade with AB indicator

2 consecutive closes outside Acceleration Bands suggest an entry point in the direction of the breakout. Then position is kept till the first close back inside the Bands.
 The formula for Acceleration Bands
Upperband = ( High * ( 1 + 2 * (((( High - Low )/(( High + Low ) / 2 )) * 1000 ) * Factor )));

Lowerband = ( Low * ( 1 - 2 * (((( High - Low )/(( High + Low ) / 2 )) * 1000 ) * Factor )));



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