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Try Free Demo. Main · Indicators · How to Use Awesome Oscillator in Trading: Main Signals. How to Use Awesome Oscillator in Trading: Main Signals. Contents How does Awesome Oscillator work? Awesome Oscillator characteristics and settings Awesome Oscillator trading signals Saucer The crossing of the zero line The divergence of Awesome Oscillator and the price chart Bottom line. How does Awesome Oscillator work?

Awesome Oscillator Awesome Oscillator characteristics and settings To add the Awesome Oscillator to the instrument chart in MetaTrader 4 and 5, open the Main Menu: Insert - Indicators - Bill Williams - Awesome Oscillator.

Awesome Oscillator - settings Awesome Oscillator trading signals Let us discuss the three main signals given by the Awesome oscillator. Saucer The Saucer signal forms when on the Awesome Oscillator histogram appears a cavity looking like a saucer bottom up or down. A signal to buy It appears in an uptrend when the Awesome Oscillator histogram is above 0. Saucer - A signal to buy A signal to sell It appears in a downtrend when the Awesome Oscillator histogram is below 0. Saucer - A signal to sell The crossing of the zero line The central axis of the Awesome Oscillator is 0.

A signal to buy If the histogram crosses level 0 from below, it signals to buy. Crossing the zero line - a signal to buy A signal to sell If the histogram crosses level 0 from above, it signals to sell. Crossing the zero line - a signal to sell The divergence of Awesome Oscillator and the price chart The divergence of the Awesome Oscillator and price charts signals a probable correction or even a reversal of the current trend.

A signal to buy A divergence signals to buy when the price chart forms a low below the previous one but the low on the Awesome Oscillator chart is above the preceding one.

Divergence - a signal to buy A signal to sell A divergence signals to sell when the price chart forms a high above the previous one but the high on the Awesome Oscillator chart is below the preceding one. Divergence - a signal to sell Bottom line Awesome Oscillator appeared and grew popular thanks to a famous exchange expert Bill Williams.

Material is prepared by Victor Gryazin Has traded in financial markets since Further reading Forex. A Week in the Market: Calm is Key 21 — 25 November.

Next-Generation Tactical Systems Manufacturer KWESST Micro Systems Inc Files for an IPO. A Week in the Market: the fall of the Dollar and Chinese statistics 14 — 18 November. How to Trade the Bat Pattern.

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Best forex technical indicator What is the best indicator used in trading forex? RECENT FORUM ACTIVITY. How procrastination to trade can affect your trading success? by Leopo Mar 13, Trader Psychology Procrastination to trade is when your trading set up confirms and you hesitate to take trade.

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A market momentum indicator, the Awesome Oscillator AO , is used to gauge the strength of the market. It uses a period SMA to compare to a 5-period SMA Simple Moving Average in order to determine the difference. There are no limits to the range of this indicator, which is rooted around a zero line and presented as a histogram averaging the results of two SMAs, one of which covers recent momentum and the other covering a lengthier time period in the market.

The midpoints of each bar are used instead of the closing price to compute the SMAs. In most cases, AO is employed to confirm current trends or to foretell when they may reverse. The AO is a creation of Bill Williams. It is a simple tool to evaluate market momentum and identify potential trend changes by weighting a period SMA against a 5-period SMA. Based on comparing two SMAs, price changes are then represented on the histogram according to their respective SMAs.

The market signals bullishness when the 5-SMA exceeds the period SMA, and the obtained histogram is above the zero line. Conversely, we have a bearish market when the value of the histogram is under the zero line, and the SMA is above the 5-SMA. The color of each histogram bar corresponds to the general market momentum shown by the AO indicator.

The zero-line crossing, the twin peaks, and the saucer are three of the most common methods used by traders to find AO chances. This method is centered on keeping an eye out for when the AO passes the zero line. An indication that the short-term momentum is outpacing the long-term momentum is the crossing of the AO above the zero-line.

When that happens, traders take long positions because of imminent price gains. Suppose the AO crosses the zero line in a downward direction. In that case, traders may be urged into a short position because the indicator shows that short-term momentum is declining faster than long-term momentum.

On the chart below, the areas in red denote bearishness, while those in green denote bullishness. The AO indicator can also be used to detect possible bearish or bullish trading opportunities by looking for twin peaks. When searching for twin peak prospects, below are some common guidelines.

Bullish twin peaks: In a bullish twin peak, there are two successive peaks below zero, but with the second peak higher than the first one and a green bar following. When trading with these peaks, ensure that the troughs separating the two peaks are below zero. Bearish twin peaks: This refers to the formation of two peaks, with the second one lower than the first one, even though both of them are above zero.

A red bar comes after the second peak in this arrangement. To validate the bearishness, the retracement between the two peaks should be above zero. In the chart above, A shows the first peak, B shows the lower second peak, C shows the trough above the zero line, and D shows the peak below the zero line.

The white lines identify bullish twin peaks, and the second peak is higher, while the bar below zero is green. All the way through the setup, the pullback remains below zero. Following the formation of the bullish twin peaks, the price rises, as evidenced by the location of the blue line below the price bars on the chart.

Two peaks above the zero line are defined as bearish by the red lines, which designate the second peak as being lower than the first, and the histogram that follows the lower peak is therefore red. In addition, the pullback never dips below zero during the whole setup. Three successive phases of movement on either side of the zero line are the primary emphasis of the saucer strategy.

There are three types of saucers: bullish, bearish, and neutral. A bullish saucer is formed when all three histograms are above the zero line. Small saucer-shaped dips appear in the overall histogram as a result of this pattern. In the event that a bullish saucer is spotted, traders may go long during the third green bar or during the fourth bar if it is also green, depending on the market conditions.

In order to form a bearish saucer, two successive green bars must appear below the zero line, the second bar being lower than the first, and then a red bar follows. Traders may sell after the formation of the third red bar or wait for the formation of the fourth one and go short if it is also red. In the chart above, A shows the bullish saucer while B is the bearish saucer.

The Awesome oscillator is effective in signaling the validity of market trends whether in manual or automated trading. It is used to confirm or reject market trends based on an assessment of short and long-term SMAs.

In order to confirm or predict market reversals, AO is used to gauge market momentum and confirm trends. In order to do so, it compares the current market momentum to the overall market momentum over a longer period of time. You can now implement the Awesome oscillator in your trading strategy or your MT4 and MT5 expert advisor. Skip to content A market momentum indicator, the Awesome Oscillator AO , is used to gauge the strength of the market.

How it works The AO is a creation of Bill Williams. How to use AO in your trading strategy The zero-line crossing, the twin peaks, and the saucer are three of the most common methods used by traders to find AO chances.

Zero-line crossover This method is centered on keeping an eye out for when the AO passes the zero line. The twin peaks The AO indicator can also be used to detect possible bearish or bullish trading opportunities by looking for twin peaks. Saucer Three successive phases of movement on either side of the zero line are the primary emphasis of the saucer strategy. Awesome Oscillator: strengths and limitations Strengths A leading indicator since it reflects market momentum.

The indicator is adaptable and can be utilized for a wide range of asset classes. Weaknesses Due to the wide range of possible false signals, traders should not rely on it as a sole indicator. In summary The Awesome oscillator is effective in signaling the validity of market trends whether in manual or automated trading. Tags: Forex Indicators. Please Share This Share this content Opens in a new window Opens in a new window Opens in a new window Opens in a new window Opens in a new window Opens in a new window.

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We will consider the rules and examples of its formation. Weaknesses Due to the wide range of possible false signals, traders should not rely on it as a sole indicator. Leave a Reply Cancel reply Comment. In the chart above, A shows the bullish saucer while B is the bearish saucer. Awesome Oscillator is based on the difference between the two Simple Moving Averages SMA. Like Our Page Free Forex Coach.

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