The Abel Average was developed by Paul Abel and is a form of an “adaptive moving average” and is intended to provide buy and sell signals when prices break out of a range or break out of a sideways market. It is displayed as an overlay.

Although the Abel average starts from the idea of tracking the average price over a given number of periods, it is intended to reduce the “trend-following” characteristics associated with typical moving averages.

Input:      Periodicity 

Constant:   Yesterday's_Factor=(1/Periodicity), 
            DragFactor=(1-Yesterday's_Factor) 

Variables:  DragValue 

   First bar: AbelAvg=(Open+Close)/2, and record AbelAvg and H,L,C for 
   tomorrow's calc. 

Second bar and thereafter... 

DragValue=(Yesterday's_AbelAvg*DragFactor) 

AbelAvg=(DragValue)+(Yesterday's_Low*Yesterday's_Factor) 

Unless (Yesterday's_Close is less than Yesterday's_AbelAvg), in which 
case...    AbelAvg=(DragValue)+(Y's_High*Yesterday's_Factor)

Abel Averages can be interpreted like a moving average, but the conventional interpretation is that an upturn could be considered bullish and a downturn could be considered bearish.

Because it is designed to be less “trend-following” then many overlays, it does not need to wait for a crossover to price or another moving average according to some traders.