How does the Awesome Oscillator work?

It uses a zero line in the centre, either side of which price movements are plotted according to a comparison of two different moving averages. Traders can use the information supplied by the awesome oscillator to forecast market momentum and whether the prevailing trend will continue or reverse.

What is the Awesome Oscillator (AO)?

The Awesome Oscillator (AO) is a popular indicator of market momentum developed by the American financial analyst Bill Williams. It is a boundless indicator anchored around a zero line and displayed as a histogram of the average of two simple moving averages (SMAs), one covering recent momentum and the other a longer period in the market.

How do you determine the Awesome Oscillator value?

Determine the Awesome Oscillator Value: Subtract the 34-period SMA from the 5-period SMA. The resulting histogram visually portrays market momentum through its bars. When bars are above the zero line and are green, it underscores a strong bullish momentum. Conversely, red bars above the zero line suggest a diminishing bullish momentum.