Awesome Oscillator

How Awesome Oscillator works

The Awesome Oscillator is useful to traders as it produces the following trade signals:

  1. A sell position if the AO goes below the zero line and forms a peak;

A buy position if the AO goes above the zero line and forms a gap

  1. A sell position if the AO creates 2 peaks above the zero line in which the second peak is lower than the first peak;

A buy position if the AO frames two lows below zero with the second low not below than the first one.

  1. A sell position if the AO crosses the zero line from up going down;

A buy position if the AO crosses the zero line from down going up.

Awesome Oscillator Trading Strategy

Awesome Oscillator’s mechanism projects three main signals. These are:

  1. Saucer – This signal is characterized by forming three columns over the nought line: 2 color red columns and 1 green column. Between the first two red columns, the second one is usually lower than the first red column. The green column goes higher than the second red column. When a saucer is projected, it indicates a ‘buy’ signal, while an inverted version of this formation indicates a ‘sell’ signal.
  2. Nought Line Cross – This formation is observed when the histogram crosses the nought line taking the upward direction which signifies a change in value (negative to positive). This projection indicates a ‘buy’ signal while the reversed formation indicates a ‘sell’ signal.
  3. Two Pikes – This formation can be traced when two pikes are projected below the nought line and the second pike is closer to level zero than the first pike. This is a signal for a ‘buy’. The reverse formation or pattern indicates a ‘sell’ signal.

Formula:

Awesome Oscillator is a 34-period simple moving average, projected through the central points of the bars (H+L)/2, and subtracted from the 5-period simple moving average, formed across the central points of the bars (H+)/2.

Median Price = (High + low) /2

AO = SMA (Median Price, 5) – SMA (Median Price, 34)

Where

SMA – Simple Moving Average

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