Accumulation Momentum Indicator

The Accumulation Momentum Indicator tool provides a composite view of market sentiment by aggregating four distinct volume and price-based momentum metrics into a single normalized oscillator.

Usage

The indicator is used to identify shifts in market momentum and the balance between accumulation (buying) and distribution (selling). Traders can interpret the output based on the 50-level midline:

• Values Above 50: Indicates that buying pressure and accumulation are dominant, suggesting a bullish trend or strengthening momentum.
• Values Below 50: Suggests that distribution and selling pressure are dominant, indicating a bearish trend or weakening momentum.
• Crossovers: A crossover above 50 can signal the beginning of a bullish phase, while a crossunder below 50 may signal the onset of a bearish phase.

By adjusting the weights of the individual components, users can emphasize specific market behaviors, such as prioritizing Force Index for magnitude or OBV for trend confirmation.

Details

The script functions by calculating four classic indicators and normalizing their disparate scales to a uniform 0-100 range using a 100-period lookback. These components include:

• Accumulation Distribution (A/D): Measures the cumulative flow of money based on the location of the close relative to the high-low range.
• On Balance Volume (OBV): Relates price change to volume to determine if volume is supporting the current price direction.
• Force Index: Combines price change and volume to measure the power behind market movements.
• Momentum: A simple rate-of-change calculation showing the speed of price acceleration over a 14-period window.

The final output is a weighted average of these four normalized values, providing a smoother, more comprehensive signal than any single component alone.

Settings

• Weight: Accumulation/Distribution (A/D): Determines the influence of the A/D line on the final composite score.
• Weight: On Balance Volume (OBV): Determines the influence of the OBV on the final composite score.
• Weight: Force Index: Determines the influence of the Force Index on the final composite score.
• Weight: Momentum: Determines the influence of the Price Momentum on the final composite score.
• Momentum Length: Sets the lookback period used specifically for the Momentum component (default is 14).

FAQ

How do I access the Accumulation Momentum Indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Can I disable specific components?

Yes, by setting the weight of any specific component (e.g., Force Index) to 0, that indicator will be excluded from the final calculation.

What do the background colors signify?

The background highlights green when the composite value is above 50 (Accumulation) and red when it is below 50 (Distribution), allowing for quick visual trend identification.