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Dashed white line is prior resistance zone.

Earlier entry has you sitting through days of ranging price action We can trade the break of the trend line when the AO turns green and not wait for the bullish AO Although AO goes below zero, we have low momentum in the pullback, low momentum in the AO.

This is a low volatility pullback in an uptrend.

Playing the breakout/pullback as a trade entry

AO has gone bullish with low momentum (small histogram bars) as price ranged.

What I have done is used the AO as a momentum trend tool and common price patterns, pullbacks and breakouts, as a means to trade the chart. Let’s go back to the previous chart……………….

Osculator tutorial free#

What we can do is add simple price patterns ( covered in my free Price Pattern E-Book) to the signals given by the oscillator. This type of trading will eventually blow your trading account. Keeping in mind that the Awesome Oscillator shows us a change in momentum, is that enough to enter a trade? The awesome indicator is not looking too awesome here, is it? The big issue: we bought at extreme highs and sold at the extreme lows. This daily chart of a Forex pair shows 50% of the trades went enough in our favor to execute trade management.

Histogram rises (falls) above (below) the zero line.

Histogram starts below (above) the zero line.

There are several ways to use the AO and the most basic way is looking for a zero line cross. Red will be the color if the bar is lower than the previous.Īwesome Oscillator Strategy #1 – Zero Line Cross

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If the fast average is below the slower average, we will be below zero and bearish.Įach bar on the histogram will color code green if the current AO bar is higher than the previous.

Looking at it from a moving average standpoint: if the fast average(5) is over the slower average (34), we will be over the zero line and bullish. The histogram will either be located above the zero line for short term bullish trend and below the zero line for a bearish outlook.

Osculator tutorial how to#

Here is how to read the Awesome Oscillatorįirst thing you will notice that unlike other oscillators like the stochastic oscillator, the awesome oscillator uses a histogram instead of a line. Virtually all charting platforms should have the AO as a technical indicator you can use. The Awesome Oscillator is calculated as: SMA (Median price of 5) – SMA (Median price of 34)Īny trading indicator you use should be understood and that includes how the indicator is calculated.

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You can see from that calculation that it takes into account the full range of the trading day, which can be important from a volatility stand point. What I do find interesting is that Bill Williams used the bar midpoint instead of the standard closing price. The truth is that the EMA and SMA, while calculated differently, should not make much of a difference for a trading strategy. Key point: Notice that Bill decided on using the simple moving average with his Awesome Oscillator. The difference between the two averages is then calculated. He then has the moving averages calculated by the midpoints of each prior candlestick. The name “Awesome” may have had you thinking it did something really special when you add it to a trading strategy.īut like any technical indicator, the Awesome Oscillator, when understood, could add something to your present strategy to increase your edge.īill Williams combines two simple moving averages, the 5 period simple moving average and the 34 period simple moving average. The Awesome Oscillator is another technical indicator designed to measure market momentum on any time frame.