How does awesome oscillator work

Momentum trading strategies offer traders an easy way to exploit short and mid-term trends. Our team at Trading Strategy Guides puts a lot of effort into developing strategies that provide you with big wins and with small losses. The AO Indicator Awesome Oscillator has been called the "super indicator" because of the incredible results some traders have had using it.

The Bill Williams Awesome Oscillator strategy can be applied across different markets, including stocks, commodities, indices, and Forex currencies. The preferred time frame for the Bill Williams Awesome Oscillator strategy is the daily time frame. This is because, after extensive research and backtesting, our team at Trading Strategy Guides has learned that the daily time frame produces the best performance.

Also, read about the Forex Mentors and the best investment you can make. Before we move forward, we must define the indicators you need to trade the Bill Williams Awesome Oscillator strategy and how to use the Awesome oscillator indicator. The Awesome Oscillator indicator is a histogram — that is similar to the MACD indicator - displaying the market momentum of a recent number of periods compared to the momentum of a larger number of previous periods.

The Awesome Oscillator histogram is a period simple moving average. However, there are other unique signals like the Awesome Oscillator saucer signal or the Twin Picks or bullish bearish divergences. When the AO is crossing above the zero line it shows that the short-term momentum is rising faster than the long-term momentum. This information is extremely useful because a shift in the trend direction will always appear first in the short-term trend and then it will spread out on the long-term trend.

Now, you might be familiar with the zero-line crossover signal since this is a common trade signal with many technical indicators. However, the Awesome Oscillator tends to give far fewer false signals when compared to other oscillators.

Compare that with the MACD indicator which generated far more signals and inevitably far more false signals. During strong trending markets, the Awesome Oscillator will keep you riding the trend while other momentum indicators will stop you out on a minor pullback or retracement.

The AO saucer signal helps you identify pure momentum continuation trades. In other words, if you miss the boat on a trend signal the Awesome Oscillator saucer will give you a second chance to enter a trend or to simply build up your forex position. The saucer setup is formed by 3 consecutive bars on the AO histogram either above the zero line or below the zero line. If you want to learn how to change the AO settings yourself, simply click on the TradingView gear icon, AO Style and choose columns instead of the histogram.

Awesome Oscillator calculations are based on the median price while the MACD is calculated using the closing price. The Awesome Oscillator indicator uses the period and 5-period simple moving average, while the MACD indicator uses period and period exponential moving averages along with the 9-period signal line.

Bonus withdrawal can be a subject to additional commission. By using the Currency. We can recommend Capital. Learn to trade Trading guides How to read and use the Awesome Oscillator trading indicator.

Awesome Oscillator can be a useful indicator during trending markets to detect alerts Trading indicators — Photo: Shutterstock Contents What is Awesome Oscillator? How to read the Awesome Oscillator In simple terms, the bar is green if it has a higher value compared to the previous bar and it is red if its value is lower compared to the previous bar. How to use the Awesome Oscillator There is a variety of strategies that could be used by traders to identify potential trading opportunities.

Awesome Oscillator and zero-line crossovers The basic alerts that are generated by the Awesome Oscillator are identified on the basis of the zero-line crossovers. A bullish buying opportunity alert occurs when the AO indicator crosses above the zero line, indicating that the short-term momentum is increasing faster compared to the long term.

A sell opportunity is detected when the indicator crosses below the zero-line mark, meaning that the short-term momentum is decreasing more rapidly than the long term. Look at the following graph. Buying and selling opportunities — Credit: Currency. Twin peaks trading Twin peaks trading is another way through which traders can identify potential bearish or bullish opportunities using the Awesome Oscillator indicator.

The general guidelines when looking for twin peaks opportunities are: Bullish twin peaks — when there are two consecutive peaks below the zero line, where the second peak is higher compared with the first one and followed by a green bar. Keep in mind that the pullback trough between the two peaks should remain below the zero line.

Bearish twin peaks — this set-up appears when there are two peaks above the zero line and the second peak is lower than the first one and is followed with a red bar. Also, the pullback between the peaks should remain above the zero line. This trading technique is much alike trading bullish divergence on histogram below Zero Line. When AO crosses below the Zero Line, the short-term momentum is now falling faster than the long-term momentum.

This can present a bearish selling opportunity. Simply Save Know how to deal with unfair claim rejection. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express writtern permission of moneycontrol.

Access event featuring 12 Days 12 Strategies 12 Experts Rs. Register Now! How to use 'Awesome Oscillator' in trading strategy Like all technical indicators, it is important to use the AO in conjunction with other technical analysis tools. Moneycontrol Contributor. The Saucer method looks for changes in three consecutive bars, all on the same side of the Zero Line.

It entails two consecutive red bars with the second bar being lower than the first bar being followed by a green Bar. It entails two consecutive green bars with the second bar being higher than the first bar being followed by a red bar. All in all, The Awesome Oscillator can be a fairly valuable tool. AO momentum can be used in some instances to generate quality signals but much like with any signal generating indicator, it should be used with caution.

Truly understanding the setups and avoiding false signals is something that the best traders learn through experience over time. That being said, the Awesome Indicator produces quality information and may be a valuable technical analysis tool for many analysts or traders. Can change the Growing Up Bar's color and thickness as well as the indicator's visual type Histogram is the default. Can also toggle the visibility of a price line showing the current value of the Awesome Oscillator.