Swing index
From Financial Literacy Wiki
Swing Index developed by Welles Wilder, is used as a part of the accumulation swing index because itself it creates an inconstant plot. The Swing Index compares the links between the ongoing prices - low, high open and close - and the previous period's prices to hold aside the "real" security's price.
The basic formula for the Swing Index is:
Swing Index = 50 * [ { Cy - C + 0.5(Cy - Oy) + 0.25(C - O) } / R ] * (K / T) Where:
C = Today's closing price L = Today's lowest price O = Today's opening price Cy = Yesterday's closing price Ly = Yesterday's lowest price Oy = Yesterday's opening price Hy = Yesterday's highest price K = The larger of either (Hy - C) or (Ly - C) R = A variable based on the relationship between today's closing price and yesterday's high and low T = The limit move value
Wilder's book "New Concepts in Technical Trading Systems" provides precise instructions on measuring the Swing Index. The Swing Index indicator appoints a Swing Index value from 0 to 100 for an up bar and 0 to -100 for a down bar. It uses the ongoing bars of High, Low, Open, and Close as well as the latest bar's Open and Close to measure the Swing Index values. When a cross falls below 0 it demonstrates a fall in market price. Vice versa, when the Swing Index crosses over 0, a short-term price raise is predicted. A smaller or larger swing index value shows the sternness of the market's price's increase or decline.
For more information on the calculation, please refer to the book "New Concepts in Technical Trading Systems" by Welles Wilder.
