Stock Diamond - Technical Analysis Education

This momentum indicator is used primarily as a component of the Accumulative Swing Index.

Overview

Welles Wilder developed the Swing Index to provide a line "which cuts through the maze of high, low and close prices and indicates the real strength and direction of the market." (For a detailed description refer to Wilder's book New Concepts in Technical Trading Systems.)

The Swing Index is used primarily as a basis for Wilder's Accumulative Swing Index (ASI) indicator.

Mr. Wilder summarizes the significance of the Swing Index as follows:

• Swing Index gives one numerical value that always falls between +100 and -100, while incorporating current and previous opening and closing prices and true range in its complex calculation.
• Swing Index provides a line which gives definitive short-term swing points.

Interpretation

The Swing Index alone doesn't provide much in the way of signals. It should be used in conjunction with the Accumulative Swing Index.

See the Accumulative Swing Index.