Bill Williams' oscillator that measures not momentum itself but its acceleration and deceleration. By subtracting AO's own 5-period average from AO, it catches the crowd psychology of the foot easing off the accelerator before price actually turns.
The Accelerator Oscillator (AC) is an oscillator devised by the trader Bill Williams.
Where many momentum indicators measure how much drive there is right now, the AC looks at whether that drive is accelerating or decelerating.
Think of a car. If the AO (Awesome Oscillator) is the speedometer, the AC reads the pressure on the gas pedal and the brake. Even at high speed, ease off the gas and acceleration stops first; only then does speed fall.
The AC isolates this acceleration by subtracting AO's own 5-period average from AO. So the AC shows the moment the growth in drive slows, before the drive itself fades.
Before price turns, momentum's acceleration stops first. That is why the AC is regarded as the earliest signal among Williams' family of indicators.
How to Read
OANDA:USDJPY
Members Only
Full access is reserved for members of the library.