ASI has positive value — uptrend. ASI has negative value — downtrend. ASI trend line breakout — validates a breakout on the accumulative swing index forex chart.
Welles Wilder, the creator of ASI indicator said, “Somewhere amidst the maze of Open, High, Low and Close prices is a phantom line that is the real market. The Accumulation Swing Index shows this phantom line – the line of the real market. The Accumulative Swing Index uses a scale from 0 to 100 for an up trend and 0 to -100 for a down trend. Accumulative Swing Index is widely used to confirm or deny trend lines breakouts on Forex charts. Welles Wilder, developer of Accumulative Swing Index indicator, describes in his book “New Concepts in Technical Trading Systems” why ASI can be used for trend line breakout confirmations. When the Index is plotted on the same chart as the daily bar chart, trend lines drawn on the ASI can be compared to trend lines drawn on the bar chart. For those who know how to draw meaningful trend lines, the ASI can be a good tool to confirm trend-line breakouts.
Often erroneous breaking of trend lines drawn on bar charts will not be confirmed by the trend lines drawn on the ASI. Signal Buy with ASI occurs when indicator exceeds its previous Swing High. Signal Sell occurs when ASI dips below its previous Swing Low. I use trade station and have to have have data inputs.