Absolute Strength Market Indicator for MetaTrader 5

The Absolute Strength Indicator, also known as the ASI, measures the strength of a currency pair’s trend. Unlike relative strength indicators that compare one currency to another, the ASI focuses on the absolute price movement. It provides insights into whether a trend is gaining or losing momentum.

Calculation Methodology

The ASI combines price changes and volume data to create a single value. The formula involves comparing the current close price with the previous close price and factoring in volume. The resulting value oscillates around a zero line, indicating bullish or bearish strength.

Components and Parameters

• Close Price: The primary input for ASI calculation.
• Previous Close Price: Used to determine the trend direction.
• Volume: Reflects market participation and conviction.

Trend Strength Measurement

• Histogram bars represent the difference between the ASI and its signal line.
• Larger bars indicate stronger trends.
• Pay attention to the bar height for trend confirmation.

Combining With Other Indicators

Using Moving Averages

• Cross-referencing ASI with moving averages enhances accuracy.
• Golden and death crosses provide valuable insights.

RSI and Absolute Strength

• RSI and ASI complement each other.
• Confirm signals by comparing their readings.

How to Trade with Absolute Strength Market Indicator

Buy Entry

• Look for the blue bullish signal line crossing above the red bearish signal line.
• This indicates the start of a bull market.
• Enter a BUY position when the crossover occurs.
• Set the stop-loss below the previous swing low.
• Continue holding the BUY position as long as the color of the top line remains blue.
• If the red signal line crosses above the blue signal line, consider it the end of the trend.
• Exit the BUY trade with a profit.

Sell Entry

• Observe the red bearish signal line crossing above the blue bullish signal line.
• This suggests the start of a bearish price trend.
• Enter a SELL trade when the crossover occurs.
• Set the stop-loss above the previous swing high.
• Hold the SELL position until the opposite crossover.
• If the blue signal line crosses above the red signal line, consider it the end of the trend.
• Exit the SELL trade.

Absolute Strength Market Indicator Settings

Conclusion

Absolute Strength Market Indicator for MetaTrader 5 Is Armed with this knowledge, traders can navigate the forex market with greater confidence and precision. Remember that while the ASI is a powerful tool, it’s essential to combine it with other indicators and sound risk management practices.