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
