Discussing the article: "MQL5 Wizard Techniques you should know (Part 50): Awesome Oscillator"
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Check out the new article: MQL5 Wizard Techniques you should know (Part 50): Awesome Oscillator.
The Awesome Oscillator is another Bill Williams Indicator that is used to measure momentum. It can generate multiple signals, and therefore we review these on a pattern basis, as in prior articles, by capitalizing on the MQL5 wizard classes and assembly.
The AO is displayed as an oscillating histogram, above and below the zero-line, which zero-line serves as a marker for no momentum, with a crossing above or below suggesting a potential trend shift. The green-bars on the histogram represent increasing bullish momentum from the previous price bar, while red-bars mark increasing bearish momentum also from the prior bar. Also, as a general overview rule, when histogram bars are above the zero-line this often suggests that a bullish trend is prevalent while if the same histogram bars (again regardless of colour per se) are mirrored on the other side of the zero-line this implies prevalent bearish momentum.
Why the name ‘Awesome’? Well, there isn’t a concise answer, or authoritative source to direct the question to; however, it is argued AO simplifies complicated momentum calculations into a simple visual indicator. By having a dual focus on fast-paced and ‘long-term’ SMAs, it helps traders get a relative sense of both short-term and long-term market dynamics. It is highly versatile, functioning well in trend-following and reversal strategies. Its practical applications are mostly with helping trades align with prevailing market momentum. It can provide potential entry and exit points as we cover below with a variety of signal-patterns, and it can also be useful in divergence analysis which we also exploit is the signal-patterns we consider below.
Despite its many signal-patterns and potential uses, it also has some inherent limitations. Like many oscillators, AO can produce false signals in range-bound or choppy markets a trait which unfortunately means it may work best when combined with other indicators in order to have a broader more comprehensive strategy.
Author: Stephen Njuki