The Acceleration Deceleration indicator is similar to the MACD, but it uses the Awesome Oscillator instead of the raw MACD. The signal line is created by smoothing the Awesome Oscillator via a simple moving average with the period 5. This indicator can be used as a MACD histogram, which is built from simple instead of exponential moving averages.
Indicator Description
Originally developed by Bill William’s, the Acceleration Deceleration indicator is similar to the MACD. However, instead of using the raw MACD, the output is created applying the Awesome Oscillator. A smoothed Awesome Oscillator using a simple moving average period of 5 bars creates the signal line. You may use the indicator as a MACD histogram, built from simple instead of exponential moving averages.
The Acceleration Deceleration is best used in combination with a mid/higher time frame trend filter, support resistance levels, statistical analysis and volume indicators. You may for example review the Heikin Ashi and the Relative Volume indicator as discussed in our Indicator Spotlight.
Other library momentum oscillators
Other than the Acceleration Deceleration indicator, our standard momentum oscillators category, feature a number of other entries, such as the Awesome Oscillator, standard or Fast Stochastics and the Traders Dynamic Index (TDI). The TDI indicator specifically was reviewed at length in our Indicator Spotlight. These are built with trend indicators, tracking short-term overbought or oversold conditions. I.e. when the oscillator value approaches the upper extreme, it indicates overbought, and as it approaches the lower extreme, oversold.
Furthermore, we also have a category for more advanced oscillators, for example the Connors RSI, Laguerre RSI, Projection Oscillator, QQE, MACD KC Lines and the MACD BB Lines. These tools build on the same concept as the standard momentum oscillators, but with a higher degree of sophistication. In general, they allow for added value approaches, utilizing a set of more complex algorithms.
Multiple series indicators, such as the MACD and TSI, featuring a selection of 30 different moving averages as input series and a category for Gapless Indicators, featuring among others the Gapless MACD are also available. The Ichimoku Kinko Hyo, discussed in our Indicator Spotlight, may also be considered as a momentum indicator.
Finally, in our Indicator Spotlight on the Z-score we discussed how to create a fixed scale for the Awesome Oscillator. Specifically, the post discussed how the Z-score can be used to create a fixed scale for an Awesome Oscillator strategy (with video). One may achieve the same with the Acceleration Deceleration indicator which is particularly useful when building entry and exit conditions for trading systems.
The Acceleration Deceleration indicator is available for NinjaTrader 8.
