The Awesome Oscillator (read AO henceforth) is an indicator used to measure market momentum. AO calculates the difference of a 34 Period and 5 Period Simple Moving Averages. The Simple Moving Averages that are used are not calculated using closing price but rather each bar's midpoints. AO is generally used to affirm trends or to anticipate possible reversals.
The Awesome Oscillator was created by Bill Williams.
CALCULATION
lengthAO1=input(5, minval=1) //5 periods
lengthAO2=input(34, minval=1) //34 periods
AO = sma((high+low)/2, lengthAO1) - sma((high+low)/2, lengthAO2)
By its nature as an oscillator, The Awesome Oscillator is designed to have values that fluctuate above and below a Zero Line. The generated values are plotted as a histogram of red and green bars. A bar is green when its value is higher than the previous bar. A red bar indicates that a bar is lower than the previous bar. When AO's values are above the Zero Line, this indicates that the short term period is trending higher than the long term period. When AO's values are below the Zero Line, the short term period is trending lower than the Longer term period. This information can be used for a variety of signals.
Zero Line Cross
The most straightforward, basic signal generated by the Awesome Indicator is the Zero Line Cross. This is simply when the AO value crosses above or below the Zero Line. This indicates a change in momentum.
When AO crosses above the Zero Line, short term momentum is now rising faster than the long term momentum. This can present a bullish buying opportunity.
When AO crosses below the Zero Line, short term momentum is now falling faster then the long term momentum. This can present a bearish selling opportunity.
Source of Info: Trading View
Download Awesome Oscillator AFL for Amibroker
The Awesome Oscillator was created by Bill Williams.
CALCULATION
lengthAO1=input(5, minval=1) //5 periods
lengthAO2=input(34, minval=1) //34 periods
AO = sma((high+low)/2, lengthAO1) - sma((high+low)/2, lengthAO2)
By its nature as an oscillator, The Awesome Oscillator is designed to have values that fluctuate above and below a Zero Line. The generated values are plotted as a histogram of red and green bars. A bar is green when its value is higher than the previous bar. A red bar indicates that a bar is lower than the previous bar. When AO's values are above the Zero Line, this indicates that the short term period is trending higher than the long term period. When AO's values are below the Zero Line, the short term period is trending lower than the Longer term period. This information can be used for a variety of signals.
Zero Line Cross
The most straightforward, basic signal generated by the Awesome Indicator is the Zero Line Cross. This is simply when the AO value crosses above or below the Zero Line. This indicates a change in momentum.
When AO crosses above the Zero Line, short term momentum is now rising faster than the long term momentum. This can present a bullish buying opportunity.
When AO crosses below the Zero Line, short term momentum is now falling faster then the long term momentum. This can present a bearish selling opportunity.
Source of Info: Trading View
Download Awesome Oscillator AFL for Amibroker
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