The awesome oscillator strategy is a popular trading method that uses an indicator to detect market momentum. Developed by Bill Williams, the indicator works both as a detection and a confirmation tool for traders.
The Awesome Oscillator is a momentum indicator that charts the difference between two simple moving averages. A positive reading indicates that the average has increased, while a negative reading indicates that it has decreased. The AO can be used with other indicators to confirm bullish and bearish trends, predict possible reversals, and help you decide when to enter or exit a trade.
When a currency pair price makes continuous new highs and the awesome oscillator does not and falls instead, it signals a bearish divergence. This implies that the market has slowed down its momentum with decreasing prices, and it is time to exit long positions and enter short ones.
Traders will typically enter a long position when the awesome oscillator crosses from above to below the zero line. Alternatively, they will enter a short position when it crosses from below to above the zero line.
One of the most reliable strategies for using the awesome oscillator is known as twin peaks. This tactic requires a trough followed by two peaks, the second peak higher than the first and accompanied by a green bar. A double top above the zero line followed by a red zone is a bearish signal, while a double bottom under the zero line followed by a green zone is a bullish one.
In order to be successful with this strategy, you need to know how to spot the occurrences of these two peaks in the Awesome Oscillator. This is a difficult task for newbies, but it can be done by watching closely and acting accordingly.
The awesome oscillator is a momentum indicator that shows a green bar when the closing price of the previous bar is higher than the opening price. It also shows a red bar when the closing price is lower than the opening price.
Another way to use the awesome oscillator is to look for a pattern called the “crosses of the zero line.” This trend is often associated with bullish and bearish signals. When a currency pair price rises, the awesome oscillator should cross the zero line from above to below; when it reverses its direction, it should cross the zero line from below to above.
This is a great technique for scalping, where traders make short-term trading decisions based on smaller ups and downs in price. It can also be used to identify buy or sell signals from a chart.
The cool thing about this strategy is that it can be applied to different time frames, and you can change its settings to suit your preferences. The downside of this strategy is that you may not be able to get an accurate reading if the market moves in a choppy manner.
Nonetheless, the strategy can be a useful one to implement in the futures markets as well. Moreover, it can be combined with other indicators to improve your results.