The Awesome Oscillator Tool

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Awesome Oscillator – AO Indicator

How to use Awesome Oscillator in trading platform

How to Use Awesome Oscillator

Awesome Oscillator Strategy includes 3 ways of trading.

  1. Open a sell position when the Awesome oscillator is below the zero line forming a peak, and open a buy position when the oscillator is above the zero line forming a gap.
  2. Open a sell position when the Awesome oscillator forms two peaks above the zero line, where the second high is lower than the previous one. And, conversely, traders watch to open a buy position when the oscillator forms to lows below the zero line with the last one not as low as the previous one.
  3. Account crossing the zero line. When the Awesome oscillator crosses it from up to down, it is time to open a sell position and when it crosses from down to up, it is time to open a buy position.

Awesome Oscillator Trading Strategy

There are three main signals of Awesome Oscillator which may be seen:

1. Saucer

Three consecutive columns above the nought line the first two of which must be colored red (the second one is lower than the first one) while the third one is colored green and higher than the previous (second) one. Such a formation would be a clear Buy signal whilst inverted and vertically flipped formation would serve as a Sell signal.

2. Nought line crossing

The histogram crosses the naught line in an upward direction changing its values from negative to that of positive ones. In this situation we have a Buy signal. The Sell signal would be a reversed pattern.

3. Two pikes

The indicator displays a Buy signal when the figure is formed by two consecutive pikes both of which are below the naught line and the later-formed pike is closer to the zero level than the earlier-formed one. The Sell signal would be given by the reverse formation.

Awesome Oscillator Formula (Calculation)

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

Use indicators after downloading one of the trading platforms, offered by IFC Markets.

What Trading Strategy to Use with the Awesome Oscillator Indicator?

The Awesome Oscillator (AO) is a histogram-type indicator designed to measure market momentum. It was first introduced by Bill Williams. It is used to determine the momentum of the asset at hand in the course of recent events within the context of a wider time frame. The indicator is also used to confirm/disprove trends and determine possible reversal points.

The Awesome Oscillator indicator as demonstrated under the price chart

How does it work?

The idea behind the Awesome Oscillator is simple. Basically, the indicator is a moving average crossover. A 34-period simple moving average is subtracted from a 5-period simple moving average. Both lines are built across the bars’ midpoints instead of closing or opening prices.

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The stand-alone Awesome Oscillator indicator

The AO values fluctuate above and below zero. The resulting values are plotted as green and red bars. Red color indicates that the bar is lower than the previous one. A green bar is in turn higher than the one before.

How to set up?

Setting up the Awesome Oscillator indicator in the IQ Option platform is easy.

Click on the ‘Indicators‘ button in the bottom left corner of the screen. Then go to the ‘Popular‘ tab and choose the Awesome Oscillator from the list of possible indicators.

Click the ‘Apply’ button. The indicator will appear in the bottom part of the screen, right below the price chart.

The Awesome Oscillator is ready to use.

How to use Awesome Oscillator

Zero Line Crossover

This is the most basic and straightforward signal a trader can get when using the Awesome Oscillator. When the AO crosses above the zero line, short-term momentum is rising faster than long-term momentum. In this case, a zero line crossover might be considered a buying opportunity. When the AO crosses below the zero line, short-term momentum is falling faster than long-term momentum. This pattern is considered by some traders as a selling opportunity.

Bearish and bullish zero line crosses on the AO graph

Twin Peaks

Two consecutive peaks can be used as a trading signal, as well. Twin Peaks take on the role of the bullish trend messengers when 1) both peaks are below the zero line, 2) the second peak is higher than the first one and is followed by the green bar, 3) the trough between the peaks stays below the zero line.

Bullish Twin Peaks setup

Twin Peaks become a signal of an upcoming bearish trend when 1) both of them are above the zero line, 2) the second peak is lower than the first one and is followed by the red bar, 3) the trough, in turn, remains above the zero line.

Bearish Twin Peaks setup

Saucer

Saucer is another signal that can be used for early trend forecasting. It follows the changes in three consecutive bars. When the Awesome oscillator is above zero and two consecutive red bars are followed by a green one, the saucer is considered to be bullish.

Bullish Saucer setup

When the Awesome oscillator is below the zero line and two consecutive green bars are followed by a red one, the saucer is defined as bearish.

Bearish Saucer setup

The Awesome Oscillator is a diverse and valuable technical analysis indicator that helps traders estimate the momentum and possible trend reversal points. However, it should be used with caution and double-checked with the help of other indicators and different time frames, as no indicator is capable of providing accurate signals 100% of the time.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

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Awesome Oscillator – AO Indicator

How to use Awesome Oscillator in trading platform

How to Use Awesome Oscillator

Awesome Oscillator Strategy includes 3 ways of trading.

  1. Open a sell position when the Awesome oscillator is below the zero line forming a peak, and open a buy position when the oscillator is above the zero line forming a gap.
  2. Open a sell position when the Awesome oscillator forms two peaks above the zero line, where the second high is lower than the previous one. And, conversely, traders watch to open a buy position when the oscillator forms to lows below the zero line with the last one not as low as the previous one.
  3. Account crossing the zero line. When the Awesome oscillator crosses it from up to down, it is time to open a sell position and when it crosses from down to up, it is time to open a buy position.

Awesome Oscillator Trading Strategy

There are three main signals of Awesome Oscillator which may be seen:

1. Saucer

Three consecutive columns above the nought line the first two of which must be colored red (the second one is lower than the first one) while the third one is colored green and higher than the previous (second) one. Such a formation would be a clear Buy signal whilst inverted and vertically flipped formation would serve as a Sell signal.

2. Nought line crossing

The histogram crosses the naught line in an upward direction changing its values from negative to that of positive ones. In this situation we have a Buy signal. The Sell signal would be a reversed pattern.

3. Two pikes

The indicator displays a Buy signal when the figure is formed by two consecutive pikes both of which are below the naught line and the later-formed pike is closer to the zero level than the earlier-formed one. The Sell signal would be given by the reverse formation.

Awesome Oscillator Formula (Calculation)

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

Use indicators after downloading one of the trading platforms, offered by IFC Markets.

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