Theory:

The original indicator was described by B. Williams as fourth dimension - Trading Zone:

  • If the current bars of AC and AO are trending up, it shows that the zone is up
  • If the current bars of АС and АО down, it shows that the zone is down.
  • If the bars of AC and AO are differently directed then the bar is colored grey.

This version:

The indicator is based on the following 3 indicators:

  • Heiken Ashi

  • smoothed (if the smoothing period is >1)

  • regular (if the smoothing period is <=1)

  • Accelerator Oscillator.

  • Awesome Oscillator.

Comparing the slope of the smoothed Heiken ashi can filter out some of the false signals. The combined states and values of the 3 are producing zones and trade signals. This version is adding the smoothing possibility using one of the 4 average types :

  • simple moving average
  • exponential moving average
  • smoothed moving average
  • linear weighted moving average