Know Forex Trading Indicators: Awesome Oscillator
One function of technical indicators in forex trading is timing , or giving us information about when we can start opening positions (buy or sell).Indicators that are used for this purpose are usually indicators that are classified as oscillators, although in some techniques trend indicators can also be used as entry signals , for example MA cross techniques.
This time, we will discuss the technical indicators that are in the oscillator class, precisely the indicator family Bill Williams, called the Awesome Oscillator .
Is this indicator really awesome as the name suggests? To answer that question, of course, must go through a series of studies that are not short. This time, we will only discuss what and how to use this indicator.Regarding the test, hopefully we will be able to discuss it on another occasion.
What is an Awesome Oscillator?
Awesome Oscillator (here we are short with AO), is actually an indicator developed from a simple moving average. So, the root is actually MA which is a trend indicator. However, in AO, with certain algorithms, the creator modifies and functions as an oscillator.
The following are examples of AO sightings on the chart:
AO only has two components, namely histogram and zero line ( zero line ). In the picture above you can see zero point zero (0.0) which is marked with a red circle, that’s the zero line in question.
Forex Trading Signals
At AO, there are several methods that can be used to get trading signals to buy or sell. The following will be discussed one by one the methods commonly used in AO.
Method 1: Saucer
Trading signals based on the saucer method can be recognized when the histogram is above the zero line. The conditions for a saucer signal are as follows:
- Buy signal
With the saucer method, a buy signal will be confirmed if you see three histogram bars that meet the following conditions:
- All histograms are above the zero line.
- The 2nd histogram must be lower than the first histogram and must be red.
- The 3rd histogram must be higher than the 2nd histogram and must be green.
To be clearer, the picture below is an example of a buy saucer:
- Sell signal
With the saucer method, a sell signal will be confirmed if you see three histogram bars that meet the following conditions:
- All histograms are below the zero line.
- The 2nd histogram must be higher than the first histogram and must be green.
- The 3rd histogram must be lower than the 2nd histogram and must be red.
To be clearer, the picture below is an example of a sell saucer:
Method 2: Nought Line Crossing
What is considered as a signal to this method is when the histogram “crosses” from the negative area (below zero) to the positive area (above zero) or vice versa.
For this method, we only need to confirm two histogram bars.
Buy signals are obtained when the histogram rises from the negative area to the positive area. The first histogram is in the negative area, while the second histogram is in the positive area.
Here is an example:
The sell signal is obtained when the histogram drops from the positive area to the negative area. The first histogram is in the positive area, while the second histogram is in the negative area.
Here is an example:
Method 3: Two Pikes
This method has several names. Some call it the name “Twin Pikes”, there are also those who call it the name “Twin Peaks”.
With this method, you can get trading signals by observing the “peak” and “valley” formed by the histogram.
Consider the following picture for examples of buy signals based on the two pikes method.
Note that Pike 1 and Pike 2 must be below the zero line. Pike 2 must be higher than Pike 1 and followed by a green histogram. That’s the buy signal confirmation.
Well, for example sell signals based on the two pikes method, you can pay attention to the following picture:
Note that Pike 1 and Pike 2 must be above the zero line. Pike 2 must be lower than Pike 1 and followed by a red histogram. That’s the sell signal confirmation.
On another occasion, we will try to discuss forex trading strategies involving AO.
See you later. 🙂