Awesome Oscillator

Description Awesome Oscillator

The Awesome Oscillator (AO) indicator, that is, the "Awesome Oscillator" (Fig. 1), belongs to the indicators for forexThe most famous trader is Bill Williams. He is a famous trader, theorist and practitioner, creator of tools, strategies and even a trading school.

Awesome Oscillator: indicator review, description, signals, strategies

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Currently, Awesome Oscillator is one of the most frequently used trading indicators, and Forex signalsThe data he gives are considered to be sufficiently accurate and reliable (forex forecasts).

Calculation formula

AO is similar to the very popular indicator MACD with the difference that the calculations in it are made not by closing prices, but by median prices. From the median price is calculated the difference between moving averages with a period of 5 and a moving average with a period of 34. That is, the oscillator indicators are calculated according to the formula:

AO = MA (median price, 34) - MA (median price, 5), where:

  • MA - simple moving average (SMA).

The median price, Median Price, is calculated as MP = (High + Low)/2, where:

  • High - the maximum price of the bar,
  • Low is his minimum price.

Awesome Oscillator shows the strength of the trend over a short period relative to the strength of the trend over a long period (Forex Trends in 2019).

In the trading terminal it looks like a histogram under schedule prices. Its values change relative to the zero line, the color of its columns changes depending on the price dynamics (as a rule it is green and red), the position and slope of the columns, specific figures are formed, which help the trader during the forex trading to make the right deal.

Awesome Oscillator in the MetaTrader 5 platform

Awesome Oscillator is among the preinstalled tools on various trading floors, including Forex brokers. In the MT5 terminal it is located in a separate list of Williams indicators (Fig. 2):

Wonderful oscillator in the MetaTrader 5 platform

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Awesome Oscillator signals

One of the standard AO signals is the slope of the columns with a change in their color. As a rule, the parameters of two or three columns in a row are estimated. A signal to buy can be a change of slope from downward to upward, when after two columns of red color there is a green column. The bars should be above the zero line. The opposite situation will be a signal to sell - the columns are below the zero line, two of them are red, the third one is green.

The crossing of the zero level by the columns is also a signal. For example, a signal to buy would be two green bars, one of which is located below the zero line and the other above it. Two red bars, one above the nought line and the other below it, will be a signal to sell.

Two columns of the same color can be signals of a trend reversal if they are located on the same side of the zero level. An uptrend is indicated by a higher maximum of the second column, a downtrend is indicated by a lower minimum of the second column.

Awesome Oscillator allows to detect divergences as well. If, for example, the price makes new maximums, but the oscillator does not show new highs, it is a bearish divergence, the price can go down. Correspondingly, a bullish divergence takes place when the price shows new lows and the oscillator shows growth, in which case an upward trend change is expected.

Trading strategies based on Awesome Oscillator

Awesome Oscillator is a universal oscillator and there are a lot of trading based on it. Forex strategies. First, it is used by itself, without additional indicators. Trading is based on signals and peculiar graphical figures, which appear on the histogram oscillator for forex.

One of such figures is the "double peak". The signal to buy will be a double minimum, formed below the zero level. But the order is placed after the formation of at least two columns of the same color, showing the reversal to the upward trend.

Sell order is placed after the formation of two peaks above the zero level, after two columns of the same color are formed, indicating a trend reversal to the downtrend. "Double peak", shown by Awesome Oscillator, in this case represents analogues to the classical graphical figures "double top" and "double bottom".

Another standard strategy for Awesome Oscillator is a corrective strategy, "Saucer". A buy order is set when the bars of the histogram, showing the downtrend, reach the zero level, but cannot overcome it, and growth begins. To implement the strategy, the two bars colored in green need to show the transition to an uptrend.

The third classic Awesome Oscillator strategy implies its ability to detect divergences. It is also possible to implement the strategy using only one Awesome Oscillator, but in the settings it is necessary to add two additional levels, one above the zero line and one below it (Fig. 3):

Wonderful oscillator indicator settings before forex trading

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The signal to buy will be the placement of the AO above the level of the new line, in this case 0.005, after the appearance of two red bars. The signal to sell will be the placement of the oscillator below the level of -0.005 and the appearance of two green bars.

This strategy was developed by Bill Williams himself, he also recommended, in order to increase the accuracy of trading, after the appearance of the signal to place Fibonacci grid on the graph by the highs and lows for the period from the crossing of the zero mark of the oscillator and to the appearance of the bars.

Awesome Oscillator is often used with other Bill Williams indicators. For example, with the Accelerator Oscillator (Fig. 4), which is designed to determine the speed of price movement:

Awesome Oscillator is often used with Accelerator Oscillator

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This strategy is based on Awesome Oscillator signals, which should help to determine entry points into trading. Accelerator Oscillator confirms the direction and strength of the trend.

The signal to buy is when the AO indicator crosses the zero level from bottom to top and a green column appears. At the same time Accelerator Oscillator should also show green color and be placed above the middle line. The signal for selling is the downward crossover of AO and appearance of a red column. Accordingly, the Accelerator Oscillator is below the middle line and a red column appears.

This strategy can be complemented by the classic indicator Parabolic SARwhich confirms the trend and makes it easier to find exit points from the forex market (The whole truth about forex).

Another strategy with the Awesome Oscillator indicator is called "MACD Profitunity". It uses AO, MACD and the Williams indicator "Fractals.". As a reminder, the fractal indicator shows the minimums and maximums for a certain period, which are identified on the chart by arrows of different colors.

The MACD is set with the parameters of the fast EMA 34, slow EMA 89, SMA 9. An uptrend is determined by placing the MACD above the line, Awesome Oscillator forms a corresponding pattern, - "saucer" or zero line crossing. Fractals are needed to determine the location of a stop loss, which should be set at the level of the last fractal below the chart. These are signals for buying. The signals to sell by this strategy will be mirror signals.

This strategy in its original version was developed by B. Williams himself, and he used another of his indicators, Alligator. But with Alligator and MACD this strategy is difficult both to understand and to implement, so it is not recommended for beginner traders.

The other strategy uses exponential moving average together with Awesome Oscillator. Here it is supposed to work with EMA with a period of 200 (Fig. 5), "Awesome Oscillator" is used with standard settings.

Trading strategy with Awesome Oscillator and EMA

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The signal for buying will be a crossing of zero level AO from the bottom up and appearance of a green column above the line, the price should be above the EMA. The signal to sell will be a downward crossover of zero level of AO and occurrence of red bar below the zero line, the price should be below the EMA. It is recommended to implement the strategy on the timeframe of 1 hour.

More advanced version of the strategy for implementation on M30 timeframe - three exponential curves with different periods - 10, 40, 150, as well as Awesome Oscillator with standard settings. According to this strategy, a buy signal will be sent if the EMA curve appears in the order of 10>40>150, and Awesome Oscillator column appears in green color above the zero line. Correspondingly, a sell signal is formed, when the exponential moving averages are lined up in the order of 150>40>10 and Awesome Oscillator column of red color appears below the zero level.

There is a strategy (Fig. 6), which applies Parabolic SAR, Moving Average and Awesome Oscillator, on the timeframe of M30. Parabolic SAR settings - step from 0.01 to 0.1, MA with period of 5, Awesome Oscillator with standard settings. The signal to buy would be if the Parabolic is below the price, the AO column is green above the zero level, the corresponding candle should close above the EMA.

Forex strategy with Parabolic, Moving Average and Awesome Oscillator

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The signal to sell will be Parabolic placed above the price, the AO will be placed below the zero level, the bar is red, the corresponding candle closes below the EMA.

Awesome Oscillator is used in combination with Bollinger Bands. Recall, Bollinger Bands - a fairly popular indicator among the tools developed by the famous trader John Bollinger, which is included in the list of standard in the trading terminals. This indicator is designed to determine, in particular, the direction of price movement and its speed.

Awesome Oscillator is often used in combination with Bollinger Bands

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In the strategy under consideration, the Awesome Oscillator indicator is set with standard settings. The Bollinger Bands indicator with a period of 20 and deviation of 3 (Fig. 7) by the closing price is used. The EMA with a period of 3 is also set.

The signal to buy is a crossing from bottom to top of the average Bollinger Bands moving average line, thus a green Miracle Oscillator column appears above the zero level. The signal to sell, respectively, is the downward crossover of the Bollinger Bands moving average line with the formation of a red column below the zero level.


In general, Awesome Oscillator is useful and effective in trading, it is often used by traders. Its advantages include the fact that it redraws indicators and has a great ability to determine the signals to enter the trades.

Its main disadvantage is that it is a lagging indicator, it gives signals when the trend has actually formed and is confidently developing. Therefore, it is not recommended for short-term timeframes. At the same time, it should be noted that the Awesome Oscillator is not easy to use, its use in trading requires the skills of a player (Forex Trading Training).

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