Awesome oscillator
The difference between a 5-bar and a 34-bar simple average of the midpoint of each bar, shown as bars.
What it shows
Bill Williams' AO uses the midpoint of each bar, (high + low) ÷ 2. It subtracts the 34-bar average of midpoints from the 5-bar average.
Bars above zero mean the short average is above the long one. The bar color shows if it grew or shrank from the previous bar.
How we find it
The same code that draws it on your chart follows these steps, with the same result every time.
- Midpoint = (high + low) ÷ 2.
- AO = SMA(5) of midpoint − SMA(34) of midpoint.
- Draw bars: teal if higher than the previous bar, red if lower.
- Mark zero.
Starting values: Short 5; Long 34. These are proposed and will be tuned on real price data before launch.
How to read it
- Teal bars rose from the previous bar. Red bars fell.
- Bars above zero: short average is above long.
- The dashed line is zero.
Status labels you may see
| Label | What it means |
|---|---|
| Above zero | AO is above zero. |
| Below zero | AO is below zero. |
| Crossing zero | AO crossed zero in the last 3 bars. |
What cancels it
Nothing cancels it.
What traders check next
- Whether bars are growing.
- Zero-line crosses.
- Price trend.
Limits
- Lags, since it uses a 34-bar average.
- Looks like MACD histogram.
- Fixed settings.
Try it in forecastviz
- Open any ticker and choose Momentum oscillators → Awesome oscillator in the left menu.
- Switch between 3M, 6M to see how the picture changes.
- Compare with MACD histogram and Momentum on the same chart.
Questions
How is it different from MACD?
It uses simple averages of the midpoint, not EMAs of the close.
What do colors mean?
Only whether the bar is higher or lower than the last.
Related trends
Further reading
- Wilder, New Concepts in Technical Trading Systems
- Appel, Technical Analysis: Power Tools for Active Investors
- Murphy, Technical Analysis of the Financial Markets
- Kaufman, Trading Systems and Methods
Educational only. Not financial advice, and not a price forecast. Charts are drawn by code from past price data, which may be delayed.