Many aspects such as: brokers’ moods, important government decisions and natural disasters – so actually everything that can change the actual trend- have impact on this indicator. AC measures acceleration and deceleration of the current driving force.
This indicator will change direction before any changes in the driving force, which, in turn, will change its direction before the price. If you realize that Acceleration/Deceleration is a signal of an earlier warning that has many advantages.
The zero line is basically the spot where the driving force is at balance with the acceleration. If Acceleration/Deceleration is higher than zero, then it is usually easier for the acceleration to continue the upward movement and it is lower the downward movement.
This movement (shown by red and green columns) shows what shouldn’t be done. If the column is red you shouldn’t buy and is it is green you shouldn’t sell.