The seasoned Forex traders may know the Accumulative Swing Index as the Cumulative Oscillation Index. This indicator is based on the Swing Index, and is generally used as a tool to verify when a trend is about to end. This very practical system is the brainchild of J. Welles Wilder, designed for investors who apply Forex trading strategies. Experts also utilize the ASI as a way to identify potential profitable trades, since the oscillator can show divergences between the currency rates and the index.

Its calculation isn’t the simplest formula for trading. The data you’ll need for obtaining ASI comprises the addition of the Swing Index, usually derived from Average Trading Range.

In order to take advantage of the benefits that ASI offers, it’s best that as a trader you study how to properly draw the trend lines. And when implementing ASI, make a mental note of the fact that it’s heavily inclined towards the closing price. This means that you’ll have a precise way to gage breaks in trend lines without having to worry about false signals.

ASI can be applied in conjunction with a profit triangle and with trend lines throughout the market’s consolidation periods. With the latter, it will help you find support and resistance on your charts.

So when you notice that the ASI reaches above the prior significant resistance level, or in other words there’s a breakout to the upward direction, you can assume it’s time to place a trade.

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