What is the Awesome Oscillator: Definition, Use, and Strategies

Hence, you can have a green histogram, while the awesome oscillator is below the 0 line. The value of using the mid-point allows the trader to glean into the activity of the day. If there was a ton of volatility, the mid-point will be larger. If you were to use the closing price and there was a major reversal, you would have no way of capturing the volatility that occurred during the day. A Bearish Twin Peaks setup occurs when there are two beaks above the Zero Line.

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Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved. The basic alerts that are generated by the Awesome Oscillator are identified on the basis of the zero-line crossovers. Simultaneous generation of signals to buy and to sell is impossible.

There can be multiple variations of trading strategies based on this indicator which make it flexible whilst it is also easy to interpret. The Awesome Oscillator is primarily used to measure market momentum and to affirm trends or to anticipate possible reversals. It does this by effectively comparing the recent market momentum, with the general momentum over a wider frame of reference. This strategy searches for quick changes in the momentum and requires a specific pattern in three consecutive bars of the AO histogram, all on the same side of the zero line. The saucer strategy involves looking for changes in three consecutive bars that are on the same side of the zero line. A bullish saucer requires all three bars to be on the positive side of the zero line.

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This strategy requires you to look for two ‘peaks’ on the same side of the zero line. An additional requirement is that the trough between the peaks must also be on the same side of the zero line. A bullish twin peaks signal has the peaks below the zero line, for which the second peak must be higher than the first saxo bank forex broker peak. A bearish twin peaks signal is the opposite of this — the two peaks must be above the zero line. Likewise, the second peak must be lower than the first peak, and then followed by a red bar. The Bill Williams Awesome Oscillator strategy is a momentum strategy that takes advantage of the most immediate trend.

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To do that, you can open a Libertex demo account, which includes a wide variety of underlying assets on CFDs. The awesome oscillator is one of the best indicators because it doesn’t require settings to be changed. Green and red are used most often, but you can choose any colour. Close the trade as soon as the AO turns around, or there is a reversal signal from candlestick or chart patterns. As we mentioned above, the crossover of the zero line is also a signal for traders. Whether you want to believe it or not, Fibonacci levels play a critical role in defining support and resistance levels when day trading.

Is Awesome Oscillator a good indicator?

Williams’ other indicators were also created to confirm or invalidate trends and define reversal points ahead of time, but none of them are as widely applicable as the Awesome Oscillator. Williams was also an author of books barefoot investor review on psychology, technical analysis, chaos theory, and trading in different markets. Bill Williams, the creator of this oscillator, was so famous that some people refer to it as the Bill Williams Awesome Oscillator.

Basically, the Awesome Oscillator measures the immediate momentum of the last 5 bars and compares it to the momentum in the last 34 bars. The Awesome Oscillator indicates if bulls or bears are in control of the market. AO is a leading indicator because it tracks the momentum of the market.

All information on The Forex Geek website is for educational purposes only and is not intended to provide financial advice. Any statements about profits or income, expressed or implied, do not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold The Forex Geek and any authorized distributors of this information harmless in any and all ways. Saucers can be either bullish or bearish, depending on their position with respect to the zero-line.

Saucer จานรอง

Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks. The dotted vertical line on the chart marks a crossover below the zero line for the AO indicator, and a price breakout below the lower Keltner Channel. The combination of these signals gives us a strong bearish signal. Keltner Channels do not come as standard indicators with MetaTrader 4. They do, however, come as part of the extended package you get with MetaTrader Supreme Edition. • When AO’s values are above the Zero Line, this indicates that the short-term period is trending higher than the long-term period.

More commonly, AO is used in conjunction with other oscillators and indicators, and also has signal filtering functions. A bearish saucer occurs below the zero line and is made up of two consecutive green bars, the second lower than the first, followed by a red bar. Traders might open a short position during the third bar or after the fourth forms, provided it is also red.

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Next, EGY spikes lower giving the impression the stock was going to fill the gap. Wrong again, as EGY only consolidates leaving you with a short position that goes nowhere. As you can see in the above example, by opening a position on the break of the trendline prior to the cross above the 0 line, you are able to eat more of the gains. One point to clarify, while we listed x in the equation, the common values used are 5 periods for the fast and 34 periods for the slow.

Therefore, the strategy, if you want to call it that, calls for a long position when the awesome oscillator goes from negative to positive territory. Conversely, when the awesome oscillator indicator goes from positive to negative territory, a trader should enter a short position. Long position set-up – this is evident when there are two successive red bars and the second bar is lower than the first one.

สรุปกลยุทธ์การเทรด Awesome Oscillator ด้วย Tradingview

The AO Indicator has been called the “super indicator” because of the incredible results some traders have had using it. Bearish divergencies might signal that prices are likely to correct and that it might be advisable to exit long positions; similarly, bullish divergences could signal a trader to exit any shorts. When a bullish saucer is identified, traders might enter a buy position during the third bar or during the fourth bar provided it is also green. As with any strategy, two peaks provide signals for bearish and bullish positions.

To add the indicator to the chart, click ‘Insert”, then choose ‘Indicators’. Bill Williams deserved a separate tab in MetaTrader, so click ‘Bill Williams’ and choose ‘Awesome Oscillator’. If it’s a bullish signal, the second low should be higher than the first one. With a bearish signal, the second top is lower than the first peak. Although the awesome oscillator is calculated automatically, it’s worth knowing how the indicator is built.

Due to the number of potential saucer signals and the lack of context to the bigger trend, we give the saucer strategy a D. Now that we are all grounded on the awesome oscillator, let’s briefly cover the 4 most common awesome oscillator strategies for day trading. The one item to point out is that the color of the bars printed represent how the awesome oscillator printed for a period.

The saucer trading signal allows analysts to identify rapid market momentum changes by looking for changes in three consecutive bars on one side of the zero-line. When the price is higher than before, the histogram produces a green bar, and if the price is lower, the histogram creates a red one. The Awesome Oscillator is a great momentum indicator, being easy to use for newer traders while offering a deeper complexity for more experienced traders to dive into. Though no indicator is perfect, having a solid grasp of using the Awesome Oscillator can be an incredible advantage against a market that isn’t always sure where it’s headed.

Even though there are similarities in the way the two indicators function, there are some differences in the calculation, the way they appear on the chart and some of the basic strategies. By comparing recent market momentum with the general momentum if you can how millennials can get rich slowly over a wider time frame, the Awesome Oscillator provides traders and analysts with a convenient picture of the market’s mindset. Awesome Oscillator calculations are based on the median price while the MACD is calculated using the closing price.

It was developed by Bill Williams, a famous charting enthusiast and technical analyst who approached the markets on a psychological level. Open a sell position, when the oscillator forms two peaks above the zero line, with the second peak lower than the first one. And vice versa, open a buy position, when the oscillator forms two lows below the zero line, with the second low higher than the previous one. Open a sell position, when the oscillator crosses the Zero Line from top to bottom, or open a buy position, when the signal crosses the Zero Line from bottom to top. The creator of the Awesome Oscillator, as well as several other indicators and oscillators, is the famous trader Bill Williams.

In the second case, we will see the oscillator bars below the zero level. As the trend increases, the moving averages will diverge more, and the oscillator bars will stretch more up or down . A bullish saucer is identified when the AO is above the zero line and three histograms go in order as one red bar, a second red bar lower than the first, and a green bar immediately after. This formation resembles a small saucer-shaped dip in the overall histogram.

Please redirect to ##BY_COUNTRY_LICENSE## if you are a ##CURRENT_COUNTRY## resident. Can change the Growing Bar’s color and thickness as well as the indicator’s visual type . Can also toggle the visibility of a price line showing the current value of the Awesome Oscillator. All references on this site to ‘Admirals’ refer jointly to Admiral Markets UK Ltd, Admiral Markets Cyprus Ltd, Admiral Markets AS Jordan Ltd, Admirals AU Pty Ltd and Admirals SA Ltd. Admirals’ investment firms are fully owned by Admirals Group AS. 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.com is prohibited.

Simple Price Oscillator Trading Strategies

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. If you’re ready to trade on the live markets, a live trading account might be more suitable for you. Admirals offers professional traders the ability to trade with 80+ currencies, with access to a range of Forex majors, Forex minors, and exotic currency pairs. So, by looking out for these particular occurrences, you can use the Awesome Oscillator as a divergence indicator. Think of them as setups, which is to say, specific occurrences in which we have previously observed a tendency for the market to behave a certain way.

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