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What is the awesome oscillator?

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In the world of technical analysis, there are various tools with different rules that are used to understand the market and make decisions. One of the useful tools in this field is called Awesome Oscillator, which is very popular. In fact, the awesome oscillator is an indicator that was created by American trader Bill Williams and is used today. Awesome Oscillator is also known as awesome oscillator and displays its data on a histogram.

Technical analysis is one of the most common ways to evaluate the market, which provides valuable results to the user through data analysis. This type of analysis tries to use charts and other tools to recognize patterns and make suggestions for the trader’s decision making. In general, indicators provide good information about that share by using mathematical calculations on the share price and trading volume. Information such as price acceleration, movement trend and other important criteria are among the things that are obtained through this data. Indicators are used to confirm and validate the share trend and lead to buy and sell signals through other charts.

How does the awesome oscillator work?


In general, those who deal with trading tools know that there are different ways to do technical analysis. Awesome Oscillator is a momentum indicator that shows you all the sudden changes and doesn’t let you miss the trends. This indicator works like the histogram of the MACD indicator and is considered one of the simplest common indicators.

As with all technical indicators, extreme volatility is never a guarantee of future market performance. It is in the best interest of the trader to manage his risk with limit orders in open positions. The awesome oscillator also displays the momentum of the price movement on the histogram and alerts the trader when the indicator crosses the zero (neutral) line upwards or downwards. Of course, this indicator has other uses, which we will discuss in detail below.

This oscillator is a 34-period moving average drawn through the midpoints of the (H+L)2 bars and subtracted from the 5-period simple moving average, drawn across the (H+L)2/bar points. This indicator shows the analyst what is currently happening to the driving force of the market. One thing to note is that the simple moving average is determined by adding up the average price of each day in the period and dividing it by the total number of days in that period.

This strategy is based on watching the moments when the Awesome Oscillator crosses the zero line or below it. When the Oscillator crosses the zero line, the short-term movement is shown to be increasing faster than the long-term momentum and the trader may be prompted to buy. Also, when the indicator crosses the zero line from the positive to the negative range, the short-term move will decrease faster than the long-term move and traders may be prompted to enter a short position.

Usable patterns on the awesome oscillator histogram

In the massive swing, we can see the patterns on the histogram from two directions; Saucer and Twin Peaks. These two patterns are the main applications of the Awesome Oscillator, which are used by many traders. The simplicity of this type of analysis has made many people familiar with it and it is used because it shows changes instantly. This indicator is used in two time periods, weekly and daily, and guides the analyst. In general, it is very important to know the target market and check its various cases before entering the market.

For trading and analysis, one should first have a specific strategy and consider various aspects in order to achieve an acceptable result. According to the explanations given, it is obvious that the formidable oscillator is a simple and practical way for this purpose. Of course, every trader chooses a special method and analysis for himself, and there is no compulsion regarding the way of examining the market. Traders use this type of technical analysis to ensure that the risk of market collapse is low, and in other words, they know the market better, but what are the two main patterns of massive swings and how do they work?

Saucer Pattern: Occurs when the histogram bars are on the zero line. A saucer signal occurs when three consecutive bars are formed on zero, the first two bars are red and the third is green. Note that in this case the second red bar is smaller than the first one and the third green bar is bigger than the previous one.

Twin peaks pattern: Twin peaks pattern occurs when two peaks are below the travel line and the first peak is higher than the second peak. For example, on December 17, 2018, this pattern marked the end of a bear market on Bitcoin’s weekly chart. If the same pattern is above the zero line, it can be a signal to sell. On the other hand, if the crossing is upward, it is a signal to buy, and if it is downward, it is a signal to sell.
Awesome oscillator compared to other indicators As mentioned above, different scales and types of analysis for market research

They exist and each trader decides which indicator to go to and how to analyze the market according to his needs and interests. Awesome Oscillator is one of the easiest choices to understand and understand the right time to buy and sell in the market and helps a person in performing technical analysis. What is the difference between this type of analysis and other scales?

Many indicators use the closing or closing points of the candles to calculate, but the awesome oscillator is checked in terms of the midpoints of the candles. We must note that the formidable oscillator also has flaws; This indicator may give a wrong signal when the trend is neutral, there is a price gap in the chart or a stock is not highly buoyant. It is interesting to know that sometimes it is recommended to combine the Awesome Oscillator with another indicator and it can provide you with a better analysis.

The two indicators SMA and RSI, each individually combined with the formidable oscillator, show interesting and accurate results. When the analyst intends to observe the events, in the indicators section, two indicators, SMA and AO, can be selected. (AO stands for Awesome Oscillator.) Also, the possibility of combining AO with RSI will also show a suitable signal. As analysts say, combining two indicators with each other or other tools can greatly reduce the percentage of trading errors and increase your accuracy.