Awesome Oscillator (AO)


Designed by Bill Williams, the Awesome Oscillator reflects market momentum. It represents the difference between a period and a 5-period Simple Moving Averages (SMA), which are not calculated on the basis of closing prices, but rather on the basis of the midpoint of each bar.

A red bar indicates that a bar is lower than the previous bar. Navigation menu Personal tools Log in. Signals to Sell Awesome Oscillator signals to sell are identical to the signals to buy. A bullish setup occurs, when the Awesome Oscillator is above the centerline and two successive red bars form, followed by a green bar. What is an Acceleration Oscillator?

Signals to Buy

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This information can be used for a variety of signals. This is simply when the AO value crosses above or below the Zero Line. This indicates a change in momentum. When AO crosses above the Zero Line, short term momentum is now rising faster than the long term momentum. This can present a bullish buying opportunity. When AO crosses below the Zero Line, short term momentum is now falling faster then the long term momentum.

This can present a bearish selling opportunity. Twin Peaks is a method which considers the differences between two peaks on the same side of the Zero Line. The second peak is higher than the first peak and followed by a green bar. Also very importantly, the trough between the two peaks, must remain below the Zero Line the entire time.

The second peak is lower than the first peak and followed by a red bar. The trough between both peaks, must remain above the Zero Line for the duration of the setup. A Saucer AO Setup looks for more rapid changes in momentum. A red bar indicates that its value is lower than that of the prior bar. Values above the centerline suggest that short-term period is trending higher compared to the long-term period.

Values below the centerline suggest that short-term period is trending lower compared to the long-term period. First, crossings over the centerline. If the Awesome Oscillator crosses above the centerline, this is considered as an indication that short-term momentum is currently increasing at a faster pace than long-term momentum. This is a signal to go long. If the Awesome Oscillator crosses below the centerline, this is considered as an indication that short-term momentum is currently decreasing at a faster pace than long-term momentum.

This is a signal to go short. This is a situation, when the Awesome Oscillator forms two peaks on the same side of the centerline. When the two peaks form below the centerline, this provides a trader with the opportunity to go long. The second peak is usually higher than the first one and is followed by a green bar.

The bottom between the peaks needs to remain below the centerline as long as the setup holds. There are 2 other rules for trading with Awesome Oscillator. Those two methods aren't used very often, but still have the right to exist and be studied. If you like to learn more about divergence, study examples of trading MACD divergence. MACD is the most common indicator for studying market divergence.

However, if to look at this combination on practice, the AC does all the work, while AO, well, shows the trend and lags behind. In the highlighted examples below when the AC changed color from red to green and vice verse - this was a signal to exit:. See fractals page for details.

Please change the background to light grey or light blue. The black background makes the chart very difficult to read when printed. They do trend as well as stocks, simply with more volatility during their trends. But you must look at the longer time frames to see this. Compare a 1h to a 4h or Daily to a Weekly chart and you'll see what I mean. I just discovered your website, and I'm very impressed that I can understand and apply the concepts in my future trades.

I change the fast sma from 5 to 4.