Awesome Oscillator (AO) technical indicator consists of a 5-period simple moving average, formed from the peaks of the middle bar (H + L) / 2, minus the 34-period simple moving average, formed from the vertices of the middle bar (H + L) / 2.

This indicator shows you clearly what is happening to the market volatility at the moment.

To add Awesome Oscillator on mt4, go to Insert -> Indicators -> Bill Williams -> Awesome Oscillator.


Buy sign

1. Saucer (disc-shaped mark)

This is a buy signal when the columns are above the zero lines (0). Brothers need to remember:
Discus signs appear when the bars reverse (from face up to face up); the second bar is lower than the first bar and is red; the third bar is higher than the second bar and is green.
At least 3 columns are required for the saucer to appear.
Also, if you want to use a saucer, make sure all the Awesome columns are above level 0.

2. The line intersects point 0

When the chart moves from the negative to the positive area, we get a buy signal.
Condition:
  • Only two bars are required for signal confirmation.
  • One of the two bars is negative and the other one is positive (going from the negative value to the positive value).
  • Buy and sell signals cannot appear at the same time

3. Two vertices

This is the only buy signal you can think of when the columns are below zero. When you see this signal, you need to remember:
  • It occurs when a downward high (the lowest point) is below zero and followed by a higher high (but still below zero, in other words, closer to zero).
  • Columns located between two vertices must also be below line 0. The signal is invalid in case the graph intersects the zero line between two vertices. A buy signal will appear immediately after the chart crosses the 0 lines.
  • Each new vertex of the graph must be higher than its previous vertex (or closer to zero).
  • Another buy signal will appear when a new higher high is formed but the histogram is not above zero.

Selling signs

With the Awesome Oscillator indicator, sell and buy signals are exactly the same. At this point, the saucer disc will be reversed and lower than zero. The zero lines will get lower - the first column is above line 0, the second column is lower, and so on. The 2-peak signal will also be reversed and located above the zero levels.

Awesome Oscillator calculation

The AO indicator is a 5-period simple moving average, formed from the vertices of the middle bar (H + L) / 2, minus the 34-period simple moving average, formed from the vertices of the middle bar (H + L) / 2. The formula is as follows:

Average price = (Peak + Bottom) / 2
AO = SMA (average price, 5) - SMA (average price, 34)