Awesome Oscillator

What is an Awesome Oscillator?

The Awesome Oscillator (AO) is a good predictor of technical analysis. It’s intended to calculate market sentiment as well as confirm patterns and predict reversals. It is used to measure market movement, it measures the discrepancy between the simple moving averages of 34 times and 5 periods
AO measures whether bearish or bullish powers are moving the market at present. It achieves so, by contrasting the latest market movement, with the universal trend over a larger reference frame
Awesome Oscillator compares recent market movements to historic market movements. It is a histogram represented by rising and falling bars moving above and below the zero line

What is the history of the Awesome Oscillator?

AO was invented by Bill Williams, an iconic technical strategist, charting enthusiast, and an American trader. He described it as the ‘best momentum predictor’ for deciding how bullish or bearish powers dominate the market 
The oscillator was not created as an independent one, it’s a part of the Chaos Theory, propagated by Williams, a scientific observer. This hypothesis emphasizes the economics of investing, as the primary force of the world capital markets
Traders who spend a lot of time on technical and fundamental analysis, lose focus on the real market which is actually dynamic. It depends on factors such as size, electricity, power, and a combination of those aspects.The Awesome Oscillator helps to identify whether the markets are driven by bullish or bearish forces. This is done by comparing the current market momentum to the general momentum over a larger reference frame.

How does Awesome Oscillators work?

The Awesome Oscillator is part of a larger community of oscillators composed of measures such as the Stochastics. So when most oscillators switch between given values like ‘0 to 100’ or ‘-100 to +100’ the awesome Oscillator is unbounded
The histogram of the awesome oscillator measure is taken from the price table. The Awesome Oscillator histogram is a basic moveable average of 34-periods. This histogram is plotted across the bar center points (h+l)/2. Subtracted from the standard 5-period moving average, graphed through the bar center points (h+l)/2. The idea behind Awesome Oscillator is simple. The metric is a shifting convergence measure- a simple moving average of 34-period is deduced from a simple moving average of 5-periods.
All lines are placed around the midpoints of doors, regardless of rates being closed or opened. Awesome Oscillator tries to gauge whether the market is currently driven by bearish or bullish forces. This is achieved by comparing the recent market momentum , with the general momentum over a broader reference frame
The Awesome Oscillator has values that fluctuate above and below a Zero Line. The generated values are diagrammed as a red and green bar histogram. A bar is green when its value is greater than the preceding bar and a red bar indicates a bar is lower than the bar above. If the values of AO are above the Zero Line, this indicates that the short term is a trend higher than the long term. When the values of AO are below the Zero Line the short-term period is shorter than the longer-term period.

How to calculate Awesome Oscillator

The AO consists of a simple moving average of 34-periods. It”s planned across the center of the rows, and is subtracted from the simple moving average of 5-periods after median size. The median price is determined by adding a given period’s high value and low value, then dividing that amount by 2.

AO= SMA (median price, 5) – SMA (median price, 34)

Importance of the Awesome Oscillator

  1. This is a valuable predictor during a business trend;
  2. This is a leading indicator as it tests the traction in the market;
  3. The predictor can be used on different asset types.
  4. The details provided by the awesome oscillator can be used by traders to predict market trends. Also,  whether the current trend will persist or reverse.

Challenges of the Awesome Oscillator

  1. It can give many false signals, depending on the strategy; AO Readings on Low Float Stocks Can Get Tricky.
  2. Traders should avoid using it as an indicator in their own right.
  3. High Awesome Oscillator Values Give higher pricing. As a counter-trader, you may trade in the opposite direction of the main pattern, if a high value in the AO returns.

    You may think the stock will not go further when you see high readings. It is where life as a dealer can get very complicated to you.  
  1. Low float movers, in the day trading community, are a big deal. So, how does the AO indicator handle movers with low floats? Like most of the metrics – not so good. 
The indicator gives off false signals in every instance and leaves you on the wrong side of the trade. Though not all this is the AO indicator fault. You need to prepare for the harsh realities of selling small float stocks. These securities will move in an erratic manner, with volume and within a very short time

What are some points to avoid problems using the Awesome Oscillator?

First, a big expansion in one direction of the awesome oscillator will signify a very strong pattern. So, do a favor to yourself, and don’t stand up to the wolf, be prepared to adapt the AO to other measures. Also, lower the hopes about how the oscillator can create price limits that a lower float honors.

Strategies for Trading Awesome Oscillator

There are several different awesome oscillator trading strategies to choose from. The oscillator technique aims to affirm or disprove patterns. It also identify possible points of reversal.  The awesome oscillator can help a trader determine when or whether they should open a buy or sell position. Below are the strongest signals for which to exchange by using Awesome Oscillator:

  1. Zero Line Crossing: It is a simple technique for the Awesome Oscillator’s computing. A cross over zero approves that an uptrend has been formed. When the AO value moves above or beneath the zero lines, traders ought to look for chances to put only buy orders on the market. But, when the Awesome Oscillator is above the zero line, go long but when the Awesome Oscillator is below the zero line making a peak, go short.

  2. Saucer Strategy: A Saucer System is aiming for speedier momentum shifts. The awesome oscillator saucer is a trading symbol used by other researchers to detect future rapid momentum changes. 

The saucer strategy involves looking for changes that are on the same side of the zero line in three consecutive bars. The Awesome Oscillator represents ‘Saucer’ purchasing and sale incentives. It uses the 3 histogram bars as follows:

Buy Signal Conditions: The Awesome Oscillator is above zero Two successive histogram bars are red (falling). The third histogram bar is green and higher than the second Position a buy order at the open of the fourth bar

Sell Signal Conditions: The Awesome Oscillator is below zero Two successive histogram bars are green (rising). The third histogram bar is red and lower than the second Position a sell order at the open of the fourth bar

  1. Twin Peaks: Twin Peaks is a method where the differences between two peaks on the same side of the zero line are considered. This technique helps traders to pick business openings that are likely to be opposite. The technique needs two peaks and a trough to form the Awesome Oscillator, both on the same side of the zero-line. 

A bullish twin peak is formed below the zero-line, with the second peak higher than the first peak and a green bar followed. At the flip side, above the zero-line, a bearish twin peak is created, with the second peak lower than the first and a red bar following. A bullish twin peak is a signal for placing a buy order whereas a bearish twin peak is a signal for placing a sell order.

When to use Awesome oscillator

The Awesome Oscillator measures market momentum and asserts trends or possible reversals. It contrasts the current market movement, with the general trend over a wider time frame. The daily time frame is the preferred time frame for the strategy of the Awesome Oscillator.
This is a versatile indicator that helps traders measure the momentum and possible trend reversal points. But traders should double-check with other indicators and various time periods. No predictor can provide 100% of the time reliable signals.” Remember one rule, you should only buy when the bar is green and only sell when it is red and not otherwise.

When not to use the Awesome Oscillator

Always watch the histogram. This is because the opposite signal can appear at any time before the pending order opens and the situation becomes unclear. In this case, cancel the order and be prepared to leave the market with benefits that were made using fractal
Besides signals, Awesome Oscillator shows you the driving force. It helps traders predict the market conditions, which is the reason this AO indicator should take place in the notion of an effective trader.

What indicators can be used with the Awesome Oscillator?

When paired with other professional analytical devices, the AO is more effective. It can be used with another oscillator displaying over-bought and over-sold conditions. Also, for more exchange zero-line and saucer trading signals. 
When the oscillator shows oversold conditions, a buy signal will be more qualified. Whereas when the oscillator indicates overbought conditions, a sell signal will carry more weight.

Market conditions for Awesome Oscillator

The technique of Williams Oscillator is applicable across various markets. Be it stocks, commodities, indexes, and currencies in Forex. Note that, the difference between the 5 and 34 simple moving is calculated here. That is to say, it lets you know when these expand. It starts widening which for moving average traders, it means momentum is picking up. 
The further removed the oscillator goes from the zero axis, the more distributed we are and will expect to see momentum thereafter. The zero lines which are itself crossed is a function of a moving average crossover. This means that the moving average has crossed the other, as you would see on a moving average of a system plotted in your chart. The oscillator itself is in this sense yet another concept of cumulative moving averages. That is not to ignore this metric. It is another means to convey the marketplace’s strength, something that can be achieved through a host of indicators
This should be remembered that price action comes first, so you should look at help and resilience before it even comes into effect. With that being already analyzed, once a supporter-resistance region bursts into the market. Williams Oscillator will highlight an sign if or not the movement can proceed. This is a trend-following indicator, so it’s not something to use in a market that’s bound to short term range.

Final thoughts on Awesome oscillators

 Bill Williams designed the indicator itself, which has been around for several years. You should think about it more or less like a tertiary signal when using Williams Oscillator. So funding and market behavior will decide what you do first. AO may be useful for purchasing and selling securities or other financial instruments. This can be achieved with the three trading techniques: Twin Peaks, Saucer, and Zero Line cross. 
With efficient stock trading tactics and basic market, research traders achieve more. The Awesome oscillator is one of the best indicators of momentum on which you can count for amazing results. This oscillator tells us very what is happening at the moment with the demand driving force. 
AO is a perfect momentum predictor. It’s applicable in different trading types including day trading, scalping, and swing trading. When understood and used, it will allow you to learn whether it’s a perfect time to go short or deep or to close your free trades.


The Awesome Oscillator is a 34-period Simple Moving Average. Strategized across the bar center points (High +Low)/2, and deducted from the five (5)-period single moving average. Graphed through the bar center points (H+L)/2.
Awesome Oscillator = Simple Average Moving (MEDIAN RATE, 5) – Simple Average Moving (MEDIAN RATE, 34), where SMA —. The indicator first of all fluctuates around line zero. If the signal rises above 0, then it’s bullish. If AO drops below 0, then bearish is the signal. Second, if Awesome Oscillator has formed two highs above 0 and the pitch between them is also above 0, this is a bearish signal.
Among all the indicators developed by Bill Williams, the most effective is the Awesome Oscillator. It’s aimed at checking the current market momentum. This helps traders to develop a successful trading strategy. 
When you open the Awesome Oscillator window, there is a histogram with bars that are parted by the zero lines and their color changes. The green color means this bar’s value is greater than the previous one’s value according to the formula. The red colour indicates that it is smaller. 
Remember, one rule is that you should only buy when the bar is green and only sell when it is red and not otherwise. Also, watch the histogram. This is because the opposite signal can appear at any time before the pending order opens and the situation becomes unclear. In this case, cancel the order and be prepared to exit the market with profit that was made using fractal. 
Besides signs, Awesome Oscillator tells you the driving force and helps you to more assess the business condition. This is why this measure will definitely take part in the context of a good investor.
The AO and MACD are indicators of technical analysis. They are used by analyzing the strength or weakness of security to run signals for likely trend reversal. Also, trend direction, or exit and entry signals. But, there are differences in how the two indicators appear on the chart and how they are calculated:
The awesome oscillator uses the Simple Moving Average of 34-period and 5-period. The MACD indicator uses Exponential Moving Averages of 26-period and 12-period along with the 9-period signal.
AO calculations are based on a mean price for the estimation of the MACD using the closing price. The MACD is measured as follows: MACD Line = 12 day EMA – 26 day EMA
Signal Line = 9 day EMA of MACD Line

Bill Williams stated thus in his book, “It is the best momentum indicator available on the stock and commodity markets, without any doubt. It is both simple and classic. It is basically a simple moving average of 34 bar, subtracted from a simple moving average of 5 bar.”

If you’re a momentum trader, Williams Awesome Oscillator strategy is a great one. We don’t look to grab tops and bottoms, but when the trend has moved in our direction, we try to join the market. 

It is a more subtle way to swap breakouts, as breakouts often signal a momentum transfer. In essence, this means that you will always be trading with a higher risk-reward ratio from a risk management perspective. However, the AO Indicator was called the “super indicator” because of the unbelievable results some traders used it.

For beginners, the Awesome Oscillator is a great way to start with trade indicators. Bill Williams uses this combination to measure the dynamics of the foreign exchange market and the market itself on November 15, 2009
The most successful day traders are those who have developed an advantage. This is where the Awesome Oscillator (AO) market condition and its predictive power comes into play. It is a powerful indicator that you can rely on when you achieve amazing results, and it is based on a bar center, rather than closing or opening prices

The Awesome Oscillator is an indicator that tries to gage whether bearish or bullish forces are driving the market at present. It achieves so by contrasting the current market movement accurately, with the general trend across a wider time period.

1) High amazing oscillator values create higher value for capital.

If you’re a counter-trader, a high valuation in the AO may lead you to want to take a trade in the alternative direction of the pattern. it’s normal to see the incredibly high reading and then think to yourself, there’s no chance the stock will go any higher.

2) AO readings can get troublesome on small float stocks.