Price Headley's Acceleration Bands serve as a trading envelope that factor in a stock's typical volatility over standard settings of 20 or 80 bars. They can be used across any time period, though Headley prefers to use them most across weekly and monthly timeframes as breakout indicators outside these bands. Using the shorter time frames can define likely support and resistance levels at the lower and upper Acceleration Bands.
Acceleration Bands are plotted around a simple moving average as the midpoint, and the upper and lower bands are of equal distance from this midpoint.
x is the period and must be an integer.
w is the width and can be any numeric value.
z is the offset in bars where 1 is 1 bar ago.
Upper acceleration bands with a period of 20 and a width of 1.00 can be written for the current bar as follows.
AVG(H0 + 4 * 1 * H0 * (H0 - L0) / (H0 + L0), 20)
But you can eliminate the 1 * from this because it doesn't affect the results of the formula and you can also get rid of the offsets since they are zero.
AVG(H + 4 * H * (H - L) / (H + L), 20)
Lower acceleration bands with a period of 20 and a width of 1.00 can be written as follows.
AVG(L - 4 * L * (H - L) / (H + L), 20)
Changing the period from 20 to 80 results in the following formula for the upper acceleration bands.
AVG(H + 4 * H * (H - L) / (H + L), 80)
And the following formula for the lower acceleration bands.
AVG(L - 4 * L * (H - L) / (H + L), 80)
For more information on Acceleration Bands and how to interpret them you can reference Catching Big Trends with Acceleration Bands by Price Headley.