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Awesome Oscillator

Type

Momentum oscillator

Short introduction

Bill Williams' Awesome Oscillator is used to determine the momentum of a market.

Statement

While the indicator closely follows the price development, it also indicates the strength of the trend. The fluctuation shows the market movement and thus indicates the market situation. The Awesome Oscillator is a simple MA oscillator, determining the difference between two MAs with different periods just as other oscillators do.

Formula/calculation

MEDIAN PRICE = (HIGH + LOW) รท 2

AO = SMA (MEDIAN PRICE, 5) - SMA (MEDIAN PRICE, 34)

where:

MEDIAN PRICE = Median price
SMA = Simple Moving Average

Interpretation

The Awesome Oscillator is displayed as a histogram. Rising trends are visualised with green bars and falling trends with red ones. For example, if the zero line is broken through from below, we can assume the end of a downward trend and so on.

Default setting

  • Period: 14 periods

Example: Awesome Oscillator

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