Bill Williams indicators
Awesome Oscillator (AO)
The gap between a 5-period and a 34-period average of the median price, drawn as green and red bars.
The idea in plain words
It compares the most recent momentum (5 candles) with the broader momentum (34 candles). Above zero, the short-term force is stronger than the long-term one.
How it is calculated
Simple averages of the median price; the bar is green if higher than the previous bar, red if lower.
AO = SMA((high + low) ÷ 2, 5) − SMA((high + low) ÷ 2, 34)How to use it
- Zero-line cross: from below to above is bullish, the reverse bearish.
- Saucer: above zero, a red bar followed by a green bar is a buy signal (and the opposite below zero).
- Twin peaks: two lows below zero, the second higher, followed by a green bar: a bullish divergence.
Drawing conclusions
- AO is a momentum gauge, not a level: compare bars with each other.
Example
AO crosses above zero on EURUSD daily and stays green for several bars: momentum has turned up.
Prices in examples are illustrative.
Watch out for
- Like most momentum tools, it gives false signals in ranges.
A little history
Bill Williams, "New Trading Dimensions" (1998).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.