Awesome Oscillator у IQ Option

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Awesome Oscillator

The Awesome Oscillator on Iqoption

(AO for short) is a histogram-looking indicators developed by technical analyst Bill Williams that serves in measuring of the market momentum. Using a wider time frame, AO indicates the change in momentum of a currency pair in current trading. Verifying the trends and establishing potential reversal points make this tool as awesome as its name.

How does IqOptions Awesome Oscillator works?

The concept of the Awesome Oscillator is not that complicated. In short, the indicator is a moving average crossover. A 34-period simple moving average is subtracted from a 5-period simple moving average. Both lines are implemented over the center of the bars instead of closing/opening prices.

The AO values can move over or under the zero line. Values are simply represented as green and red bars. When the bar is red it means it has lower value than the previous one. When the bar is green it indicates its higher value from the one preceding it.

How to set up it on iqoption?

Using simple steps, we will show you how to set up the Awesome Oscillator in the IQ Option platform. In the bottom left corner of your window, you should click on the “Indicators” button. This will open up a list of all the indicator. Select “Awesome Oscillator” from the this catalogue.

From here just click on the “Apply” and Awesome Oscillator will appear under the price chart on your window.

You are now ready to use The Awesome Oscillator.

How to read iqoption Awesome Oscillator? Zero Line Cross

Zero Line Cross is pretty basic and easy to read signal. Focus is on the zero line and when that line is crossed by AO. When the AO goes over the zero line, it means the short-term momentum is more powerful that the long-term momentum. This indicates an uptrend and a strong buying signal. Alternatively, when the AO goes under the zero line, it means that the short-term momentum is weaker than the long-term momentum. This is a selling signal to most traders.

Twin Peaks

Twin Peaks are a little harder to read, but nevertheless pretty straightforward. They appear as 3 distinctive signs when indicating an uptrend: 1. Both peaks are under the zero line, 2. The second peak is closer to the zero line and is succeeded by a green bar, 3. The rack between both peaks remains under the zero line.

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Twin Peaks signal a downtrend when following happens: 1. Both peaks are over the zero line, 2. The second peak is closer to the zero line and is succeeded by a red bar, 3. The rack between both peaks remains over the zero line.

Saucer

Saucer is represented as a dent in the AO histogram. Following three bars in a row can show a bullish or bearish signal. In the case when the AO is over the zero line and two red bars in a row are succeeded by a green one, sauces is showing an uptrend.

Alternatively, in the case where AO is under the zero line and two green bars in a row are succeeded by a red one, the saucer indicates a downtrend.

Although The Awesome Oscillator is simple yet powerful analysis tool that can indicate momentum shifts and potential reversal points, it is advised to use it carefully and with the help of other indicators and larger time frames as well.

2 Comments

I love education section from Iqoptions thanks for nice explaination of AO. So i started use it for trading for a long time now.

Moving Average is one my #No1 preferred indicator which I use in my trading strategy. And if follow it correctly without emotions it gives me good results associated with Strong sell or strong buy pourcentage observation to determine the position of trading whether Call or Put.

What Trading Strategy to Use with the Awesome Oscillator Indicator?

The Awesome Oscillator (AO) is a histogram-type indicator designed to measure market momentum. It was first introduced by Bill Williams. It is used to determine the momentum of the asset at hand in the course of recent events within the context of a wider time frame. The indicator is also used to confirm/disprove trends and determine possible reversal points.

The Awesome Oscillator indicator as demonstrated under the price chart

How does it work?

The idea behind the Awesome Oscillator is simple. Basically, the indicator is a moving average crossover. A 34-period simple moving average is subtracted from a 5-period simple moving average. Both lines are built across the bars’ midpoints instead of closing or opening prices.

The stand-alone Awesome Oscillator indicator

The AO values fluctuate above and below zero. The resulting values are plotted as green and red bars. Red color indicates that the bar is lower than the previous one. A green bar is in turn higher than the one before.

How to set up?

Setting up the Awesome Oscillator indicator in the IQ Option platform is easy.

Click on the ‘Indicators‘ button in the bottom left corner of the screen. Then go to the ‘Popular‘ tab and choose the Awesome Oscillator from the list of possible indicators.

Click the ‘Apply’ button. The indicator will appear in the bottom part of the screen, right below the price chart.

The Awesome Oscillator is ready to use.

How to use Awesome Oscillator

Zero Line Crossover

This is the most basic and straightforward signal a trader can get when using the Awesome Oscillator. When the AO crosses above the zero line, short-term momentum is rising faster than long-term momentum. In this case, a zero line crossover might be considered a buying opportunity. When the AO crosses below the zero line, short-term momentum is falling faster than long-term momentum. This pattern is considered by some traders as a selling opportunity.

Bearish and bullish zero line crosses on the AO graph

Twin Peaks

Two consecutive peaks can be used as a trading signal, as well. Twin Peaks take on the role of the bullish trend messengers when 1) both peaks are below the zero line, 2) the second peak is higher than the first one and is followed by the green bar, 3) the trough between the peaks stays below the zero line.

Bullish Twin Peaks setup

Twin Peaks become a signal of an upcoming bearish trend when 1) both of them are above the zero line, 2) the second peak is lower than the first one and is followed by the red bar, 3) the trough, in turn, remains above the zero line.

Bearish Twin Peaks setup

Saucer

Saucer is another signal that can be used for early trend forecasting. It follows the changes in three consecutive bars. When the Awesome oscillator is above zero and two consecutive red bars are followed by a green one, the saucer is considered to be bullish.

Bullish Saucer setup

When the Awesome oscillator is below the zero line and two consecutive green bars are followed by a red one, the saucer is defined as bearish.

Bearish Saucer setup

The Awesome Oscillator is a diverse and valuable technical analysis indicator that helps traders estimate the momentum and possible trend reversal points. However, it should be used with caution and double-checked with the help of other indicators and different time frames, as no indicator is capable of providing accurate signals 100% of the time.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

How to Trade with Ultimate Oscillator — Step-by-step Guide for Beginners

Ultimate Oscillator (UO) is a momentum indicator that combines short-, medium- and long-term price action into one analysis tool. There is Awesome Oscillator, Pretty Good Oscillator and then there is Ultimate Oscillator. What’s the difference between the three and why to use this particular indicator? Read the full article to learn more.

How it works?

As most oscillators, the indicator is a combination of three lines — the indicator line and two horizontal levels: 30 for oversold and 70 for overbought. Unlike most other momentum oscillators, Ultimate Oscillator is using not one but three distinct timeframes to make its readings more accurate and prevent the formation of false divergences. Each time frame is assigned with a weight of its own, with the shortest receiving the most weight. Longer timeframes, although not as important in terms of calculation, are nonetheless factored. The ultimate goal of this setup is to eliminate false divergences (which are quite common among momentum oscillators). It can be said that UO is an upgraded, yet lesser-known version of Awesome Oscillator.

How to use in trading?

This oscillator can be used as a measure of buying/selling pressure. The general rule tells the following: when the buying pressure is strong, the indicators goes up. When the buying pressure weakens, the indicators will go down.

A divergence is the difference in the direction of the general trend and the indicator itself. When the prices make new lows and the indicator doesn’t, a bullish divergence is observed. When the prices make a higher high and the indicator fails to do so, a bearish divergence is observed.

According to Larry Williams, the man behind the indicator, there are certain criteria for entries/exits:

A buy signal is received when 1) a bullish divergence is formed, 2) the oscillator has fallen below the 30 threshold and 3) the oscillator then breaks above the highest point observed during the divergence .

Bullish divergence identified by Ultimate Oscillator

A selling signal is received when 1) a bearish divergence is present, 2) the high of the divergence is above the 70 line and 3) the oscillator then falls below the lowest point observed during the divergence .

Bearish divergence identified by Ultimate Oscillator

As always, you should consider using Ultimate Oscillator in conjunction with other indicators and remember that no indicator is capable of providing accurate signals 100% of the time. All indicators can and will provide false signals from time to time.

How to set up?

When working with IQ Option, setting up the Ultimate Oscillator indicator is easy. Here’s what you need to do:

  1. Click on the ‘Indicators’ button in the left-hand bottom corner of the screen and go to the ‘Momentum’ tab,

2. Choose ‘Ultimate Oscillator’ from the list of available indicators,

3. Without changing the default settings hit the ‘Apply’ button. Experienced traders can adjust Period 1, 2 and 3 to their liking as long as they understand the principles behind the indicator and the way it is calculated.

The indicator is ready to use!

Now, when you know how to set up and use Ultimate Oscillator in trading, you can try it and see if this indicator can become a part of your trading strategy.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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