Arps Price Leader Acceleration Index

The Arps Price Leader is an excellent acceleration-based early warning indicator. This indicator is very useful in all markets and time frames for identifying impending changes in direction. A crossover of the red Fast Price Leader line over the green Slow Price Leader line signals an impending change in direction for the market. Price direction changes are confirmed by a crossover of the Slow Price Leader line over the 50 center line.

When the Arps Price Leader is above the 50 center line, it means that price is still accelerating to the upside. When the Arps Price Leader crosses below the 50 center line, it means that price acceleration has reversed and the momentum is now slowing. The greater the prior excursion away from the center line, the stronger the price move will be in the opposite direction when the Arps Price Leader "slingshots" back across the center line. A curling over of the Fast Price Leader line and a subsequent crossing of the Slow Price Leader line are indicative of an impending turn in the price trend. You will also frequently see a characteristic "mini double top/bottom" in the Fast Price Leader line over a 3- to 6-bar interval, which usually is the precursor to a significant reversal in trend.

Not only does the direction of the oscillator change just before major tops and bottoms, but, even more importantly, most of the time, divergences appear between the Arps Price Leader oscillator and the price bars to confirm the pending change in market direction. This means that it frequently works best if you ignore the first reversal in the oscillator and wait for the second. If the two peaks or valleys in the oscillator show a divergence from the price tops and bottoms, the odds are greatly increased that a major turning point is at hand. The Arps Price Leader oscillator is a powerful trading tool that can lead to consistent profits when used with trading discipline.

NOTE: Before modifying any inputs, be sure you have read the section entitled "Using Input Settings."

This oscillator the following inputs:

Fast Line Sensitivity (Defaut = 6, Range = 1-10) This input controls the sensitivity of the fast Price Leader line. Higher numbers make it smoother but cause crossover signals to occur later.

Slow Line Sensitivity (Default = 6, Range = 1-10) This input controls the sensitivity of the slow Price Leader line. Higher numbers flatten the line and increase the spread between the fast and slow lines.

Note: The above settings of 6 and 6 have been carefully chosen to produce optimum performance and should not be changed capriciously. For best results, spread the chart out with wide bar spacing to more clearly identify crossover points.

Overbought Zone and Oversold Zone (Default 50 and 50, to create a centerline—see below) These inputs control the level of the OverBought and OverSold boundary lines. These lines are for the benefit of the viewer who wishes to identify and mark a particular value as overbought or oversold. Because the Arps Price Leader can be an unbounded oscillator, the above two inputs both have default values of 50 so as to draw a center line for the oscillator, but you may wish to change them to set overbought and oversold levels for the particular chart you are using.