Awesome Oscillator (AO) is a 34-period simple Moving Average, plotted through the middle points of the bars (H+L)/2, which is subtracted from the 5-period simple Moving Average, built across the central points of the bars (H+L)/2. AO shows the state of the market driving force at present.
Awesome Oscillator is mostly used when the trend cannot be clearly traced. AO has three main signals: the saucer (reversed saucer), crossing of the zero line and two pikes. The saucer is a chart consisting of three candlesticks where the second (red) is lower than the first and the third (green) is higher than the second. Crossing of the zero line takes place when the chart passes from negative to positive values and vice versa.. Two pikes is a chart where there is a peak followed by another peak that is higher/lower than the first one. Both peaks should be above or below the zero line.
Methods of use:
| 1. | When the saucer signal is formed above the zero line or when crossing of the zero line is from the negative into the positive side or when the two pikes are formed below the zero line, it is a signal to buy. |
| 2. | When the saucer signal is formed below the zero line or when crossing of the zero line is from the positive into the negative side or when the two pikes are formed above the zero line, it is a signal to sell. |
