Accumulative Swing Index (ASI) Forex Trading Strategy

The Accumulative Swing Index (ASI) forex strategy is a strategy that offers traders the ability to gauge the long-term picture of price by using data from its open, close, high and low prices over s defined time period.

The strategy combines with the 123ForexPatterns custom indicator to achieve this goal.

Chart Setup

MetaTrader4 Indicators: 123ForexPatterns.ex4 (default setting), ASI.ex4 (default setting)

Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly

Recommended Trading Sessions: Any

Currency Pairs: Any pair (majors, currency crosses, exotic pairs)

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Download the Accumulative Swing Index (ASI) Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy entry when the following conditions or rules are in place:

  1. If the Accumulative Swing Index (ASI) exceeds its value on the day following a previous significant high swing point i.e. a rising ASI indicator is indicative of a bullish trend.
  2. We confirm our bullish signal from “rule 1” above when price finally breaks the bullish breakout line i.e. the blue horizontal line of the 123ForexPatterns custom indicator.

Stop Loss for Buy Entry: Place stop loss below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit on position(s) if the following indicator or chart patterns are in display:

  1. If the Accumulative Swing Index (ASI) indicator declines, it is a trigger to exit or take profit on position(s). A trendline can be drawn on the ASI indicator line and if price breaks below this trendline, it is a trigger to exit or take profit.
  2. If price opens and closes below the red horizontal line of the 123ForexPatterns indicator, it is the final confirmation that we require to exit or take profit on our position(s).

Sell Entry Rules

Place a sell order if the chart or indicators are aligned as follows:

  1. If the Accumulative Swing Index (ASI) drops below its value on the day following a previous significant low swing point i.e. a declining ASI indicator is indicative of a bearish trend.
  2. Following the pattern on “rule 1” the bearish signal is confirmed when price breaks below the red horizontal line of the 123ForexPatterns custom indicator.

Stop Loss for Sell Entry: Place stop loss above immediate resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit on position(s) if the following chart or indicator patterns are in display:

  1. If the Accumulative Swing Index (ASI) surges, it is a trigger to exit or take profit accordingly.
  2. If price opens and closes above the blue horizontal line of the 123ForexPatterns indicator, it is the ultimate confirmation that we need to exit or take profit on our position(s).

Fig. 1.1

Free Download

Download the Accumulative Swing Index (ASI) Forex Strategy

About The Trading Indicators

The Accumulative Swing Index (ASI) indicator is credited to Welles Wilder and is mostly used for futures trading, but can also be used in analyzing other assets as well.

The indicator can be employed in confirming trend line breakouts, since same trendline can be seen on price chart as well.

The ASI gauges the long-term trend of a security by comparing the candles containing its open, close, high and low prices over a specified time period.

The 123ForexPatterns indicator on the other hand offers insight to bullish and bearish price breakout levels.

The blue horizontal line represents a bullish breakout, while the red horizontal line represents a bearish breakout.

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