Awesome Oscillator
Technical IndicatorsA momentum histogram created by Bill Williams that shows the difference between the 5-period and 34-period simple moving averages of bar midpoints (average of high and low). Green bars indicate increasing momentum; red bars indicate decreasing momentum.
What Is the Awesome Oscillator?
The Awesome Oscillator (AO), developed by Bill Williams, measures market momentum by comparing recent momentum to a broader momentum window. It subtracts the 34-period Simple Moving Average of bar midpoints from the 5-period SMA. The result is displayed as a histogram. When the histogram is above zero, short-term momentum exceeds long-term momentum (bullish). Below zero, bearish. Bars are colored green when the current value is higher than the previous bar, red when lower.
AO Trading Signals
Three main signals: The zero-line cross (bullish when AO crosses above zero, bearish when below). The "twin peaks" (a bullish twin peaks forms when AO makes two troughs below zero with the second being shallower, followed by a green bar). The "saucer" setup (three consecutive bars above zero where the middle bar is the lowest and the third is green, signaling momentum resumption in a bullish trend).
AO with the Alligator
Williams designed AO to work alongside the Alligator Indicator. The process: first, wait for the Alligator to wake up (lines fanning out). Then use AO to confirm momentum direction and find entries. A zero-line cross on AO in the same direction as the Alligator trend provides a high-confidence entry. Use the Alligator's Teeth line as your trailing stop. This combined system works across all major forex pairs and is particularly effective on 4-hour and daily charts.
Related Terms
Alligator Indicator
A trend indicator developed by Bill Williams consisting of three smoothed moving averages (Jaw, Teeth, Lips) with different periods and forward shifts. When the lines intertwine, the "Alligator is sleeping" (range). When they fan out, it is "eating" (trending).
MACD (Moving Average Convergence Divergence)
A trend-following momentum indicator that shows the relationship between two exponential moving averages. The MACD line, signal line, and histogram together help identify trend direction, momentum shifts, and potential entry points.
Momentum Indicator
A basic oscillator that measures the difference between the current price and the price a set number of periods ago. Unlike the percentage-based Rate of Change, momentum uses absolute price difference and oscillates around zero.