Hi, traders!
Today we’ll speak about one of the most pretty and easy-to-interpret oscillator - Awesome oscillator.The Awesome Oscillator Indicator (AO) is a technical analysis indicator created by Bill Williams as a tool to determine whether bullish or bearish forces dominate the market. It measures the market momentum with the aim to detect potential trend direction or trend reversals. The market momentum is evaluated using a combination of a shorter time frame and longer time frame simple moving averages or stated differently, it considers the recent momentum in comparison with a higher frame momentum.
The Awesome Oscillator is calculated as the difference between the newest 5 periods (bars) simple moving average (SMA) and the 34 bars simple moving average. But instead of the closing price, the indicator uses the bar midpoint value.
The indicator is plotted as a histogram in a box at the bottom of the chart and the histogram bars are found in either of the two colors red or green (with some trading platforms the lines can be red or blue). When the midpoint value of the last price is higher than the previous bar midpoint, the histogram will be green (blue) and if the midpoint of the last bar is lower compared to the previous bar, it will be red.
How to use Awesome Oscillator?
There are a variety of strategies which could be used by traders to identify potential trading opportunities. Some of the well-known and basic trading setups are the zero-line and divergence.
Awesome Oscillator and zero-line crossovers
The basic alerts which are generated by the Awesome Oscillator are identified on the basis of the zero-line cross overs.
* A bullish buying opportunity alerts occur 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 displaying that the short-term momentum decreases more rapidly than the long-term.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
Today we’ll speak about one of the most pretty and easy-to-interpret oscillator - Awesome oscillator.The Awesome Oscillator Indicator (AO) is a technical analysis indicator created by Bill Williams as a tool to determine whether bullish or bearish forces dominate the market. It measures the market momentum with the aim to detect potential trend direction or trend reversals. The market momentum is evaluated using a combination of a shorter time frame and longer time frame simple moving averages or stated differently, it considers the recent momentum in comparison with a higher frame momentum.
The Awesome Oscillator is calculated as the difference between the newest 5 periods (bars) simple moving average (SMA) and the 34 bars simple moving average. But instead of the closing price, the indicator uses the bar midpoint value.
The indicator is plotted as a histogram in a box at the bottom of the chart and the histogram bars are found in either of the two colors red or green (with some trading platforms the lines can be red or blue). When the midpoint value of the last price is higher than the previous bar midpoint, the histogram will be green (blue) and if the midpoint of the last bar is lower compared to the previous bar, it will be red.
How to use Awesome Oscillator?
There are a variety of strategies which could be used by traders to identify potential trading opportunities. Some of the well-known and basic trading setups are the zero-line and divergence.
Awesome Oscillator and zero-line crossovers
The basic alerts which are generated by the Awesome Oscillator are identified on the basis of the zero-line cross overs.
* A bullish buying opportunity alerts occur 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 displaying that the short-term momentum decreases more rapidly than the long-term.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
Skyrex.io is an AI-powered platform designed to make professional-level trading effortless and accessible for everyone
Access free SmartTrade terminal and automated AI bot at app.skyrex.io
Access free SmartTrade terminal and automated AI bot at app.skyrex.io
