Awesome Oscillator (AO) is simply the difference between the 34-period and 5-period simple moving averages of the bar's midpoints (H+L)/2.
It determines market momentum at a given time comparing the last 5 bars to the last 34 bars.
Awesome Oscillator (AO) is displayed on the chart as a histogram:
Awesome Oscillator generates three buy signals and three sell signals, but we do not use them until the first fractal buy or sell signal is triggered outside the Alligator's mouth.
First signal
Awesome Oscillator Saucer buy signal is generated when the histogram which is above the zero line changes its direction from down move to up move.Histogram “a” bar, of any color, should be higher than histogram “b” bar. Histogram “b” bar must be red. Histogram “b” bar (signal) must be green.
Once the signal has been generated, place a Buy Stop one tick above the high of the price bar that corresponds to the histogram “c” bar.
The most recent saucer signal cancels all previous ones (do not forget to delete pending orders after the signal is cancelled). Bear in mind that we buy only if the current histogram bar is green and we sell only if the current histogram bar is red.
Awesome Oscillator Saucer sell signal is the opposite of the Awesome Oscillator Saucer buy signal.
Second signal
A buy (sell) signal is generated when the histogram crosses the zero line from negative to positive territory:Place a Buy Stop (Sell Stop) one tick above the high of the price bar (below the low of the price bar) that corresponds to the first bar that crosses the zero line.
If there is a buy signal, histogram “b” bar (a signal one) is green, if there is a sell signal it is red.
Third signal
... is called the Twin Peaks buy (sell) signal. It is generated when the histogram is lower
(higher) than the zero line, and the last indicator's bottom is higher (last indicator's top is lower) than the preceding one. Between these two bottoms (tops) the histogram can never be higher (lower) than zero:The Twin Peaks buy signal is the only buy signal that is created below the zero line. Similarly, the Twin Peaks sell signal is the only sell signal that is created above the zero line.
Place a Buy Stop (Sell Stop) one tick higher than the top (lower than the bottom) of the signal bar. In the case of a buy signal, histogram “C” bar (a signal one) is always green, otherwise it is red.
Never buy on a red histogram bar and never sell on a green one. If an “unfriendly” histogram bar occurs before the execution of a pending order, which was placed in the direction of the Awesome Oscillator signal, the signal has to be ignored and the order has to be deleted.
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