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The Awesome Oscillator is an indicator that measures the momentum of the market. It consists of calculating the midpoint (high minus low divided by two) and creating two moving averages based on this series. The first moving average uses a 534-bar period and it is subtracted to the second one, which uses 5-bar period. These are the default periods. They can be changed easily in the indicator parameters.
Formula to plot the Awesome Oscillator Indicator:
a = AwOsc(5, 34);
plot(a, "", colorBlue, ChartBar);
The above instructions when applied to a chart display a histogram of the Awesome Oscillator.
You can plot increasing bars in green and decreasing bars in red by adding the following two lines:
UpdateColor(a > a[1], colorGreen);
UpdateColor(a < a[1], colorRed);
There several ways to use the awesome oscillator indicator in your strategy.
Interpretation Example:
The buy signal occurs when the indicator moves from negative to positive. In other words, the signal occurs when the indicator crosses the zero line from below.
The sell signal occurs when the awesome oscillator indicator crosses the zero line from above.
Technical analysis with the awesome indicator is suitable for markets that sustain long stable trends. For volatile and unstable markets, it is better to search for other indicators to study.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
