The most important out of all the indicators created by Bill Williams is Awesome
Oscillator (AO) integrated into your trading terminal. Its goal is to determine the
current momentum on the market, i.e. its driving force which is the 2nd measurement that
helps to build a successful trading strategy.
When you open the window of Awesome Oscillator indicator you will see the histogram
with bars which are separated by the zero line (nought line) and changing their color.
The green color means that, according to the formula, the value of this bar is higher
than the value of the previous one and the red color means that it is lower. You
should remember one rule that you should buy only when the bar is green and sell only
when it is red and not otherwise.
Awesome Oscillator Signals to Enter the Market
Bill Williams offers to remember 3 signals of Awesome Oscillator which allow to enter
Saucer. In order to open long position you need 3 bars above zero. Let's name
them A, B, C. A should be certainly higher than B, i.e. it should be green. B should be
red without fail. C is a signal bar and it should be green. So you will see a small
hollow on the histogram. This is the signal which induces to buy.
The pending order should be set
one point higher the High bar which corresponds to the signal bar.
Regarding the signal to buy, it appears as three bars but under the zero line
(nought line). In this case A and C are red and B is green.
Nought line crossing. In order to buy currency you need to wait for the
appearance of the green bar situated above the zero line (nought line) which was
preceded by the red one under this line. If you are looking for the entrance to the
short position then the green bar should be replaced by the red one.
Two pikes. Please look carefully at the histogram. For example, you see that
the bars have made 2 pikes between which there is a hollow and all this is situated
above zero. So if the second pike (from left to the right) is closer to the zero
line than the first one this is a signal to sell. It is similarly with the signal to
buy you are looking for 2 pikes under the zero line and the last one should be
closer to this line. If you are buying when Awesome Oscillator was above zero and
selling when it is under zero then it is the only signal when you perform in the
opposite way. At this moment you are likely to watch a divergence.
For example, you see that the bars are coming up but Awesome Oscillator is
conversely coming closer to the zero line this means that the fifth wave
(Elliott waves) and now the price will be corrected,
i.e. the movement to the opposite direction from existing one will begin.
Working according to the concept of Bill Williams you should remember that the first
signal to any actions is a filled fractal (five bars) outside the
After its actuation (execution of the placed pending order) you start to
look for signals from other measurements. And don't forget the most important you
should buy only when the bar is green and sell when it is red.
And also watch the histogram because before the pending order opens the opposite
signal can appear any time and the situation will become unclear. In this case, cancel
the order and be ready to exit the market with profit which was made with the help of
fractal. In addition to signals, Awesome Oscillator shows you the driving force and
allows you to estimate the market situation more clearly, that's why this indicator
should certainly take place in the concept of a successful trader.