Awesome Oscillator (AO)
The Awesome Oscillator (AO) indicator shows the direction of the market’s driving force. It's the difference between the 5 period and 34 period simple moving averages of the median price. The AO is plotted using the current median price as the nought line.
There are three buy signals:
- When a saucer appears entirely above the nought line
- When the oscillator crosses the nought line from below and becomes positive
- When two pikes appear entirely below the nought line
Saucers and two pikes are defined as follows:
- A saucer is a three interval pattern where the middle interval is the lowest of the three
- Two pikes is a deep minimum followed by a shallower minimum – all the intervening intervals must be below the nought line
The sell signals are the opposites of the buy signals:
- When a saucer appears entirely below the nought line
- When the oscillator crosses the nought line from above and becomes negative
- When two pikes appear entirely above the nought line
Saucers and two pikes are inverted for sell signals:
- A saucer is a three interval pattern where the middle interval is the highest of the three
- Two pikes is a maximum followed by a lesser maximum – all the intervening intervals must be above the nought line
Calculation
The Awesome Oscillator is the 5 period simple moving average (SMA) of the median price, minus the 34 period simple moving average. This is plotted using the current median price as the nought line; the current median price is subtracted from the oscillator.
AO( J ) = SMA( MEDIAN( J ), 5 ) - SMA( MEDIAN( J ), 34 )
MEDIAN = ( HIGH( J ) + LOW( J ) ) / 2
PLOT = AO( J ) - MEDIAN( J )
J is the current interval
You can find more information about technical indicators in the MetaTrader 4 User Guide. Select Help > Help Topics > Analytics > Technical Indicators.
