"We now come to the second of our five trading dimensions: the Awesome Oscillator (AO). It is, without doubt, the best momentum indicator available in the stock and commodity markets. It is as simple as it is elegant. Basically, it is a 34-bar simple moving average that is subtracted from a 5-bar simple moving average. It is possible to be a profitable commodity and stock trader using only this oscillator, as we will explain in the next section."

© Bill Williams. "Trading Chaos"  see book...

• Implements 2nd dimention "Chaos trading system" (by Bill Williams)
• Displays current momentum
• Shows active trading signals only
• Easy to customize
• Has presets

On the image you can see default view of the BWI Awesome Oscillator. (As soon as you have added it to a chart.)

BWI Awesome Oscillator has 3 types of signal. It displays them as rectangles with different sizes and colors. (appearance, size, color and etc. can be changed by trader by using indicators properties).

By default all Buy signals are green, Sell – blue; After the appearance of a rectangle (any type) trader should wait for breakout signal (displayed as arrow) and after that placing an order or he can place pending order higher/lower at a certain distance from maximum/minimum of a bar with rectangle signal.

The Breakout signal will appear when price go higher then bar’s maximum with a rectangle signal (or lower than bar’s minimum) on certain number of pips (in the original 1 pips).

To show where trader should place a pending order (using new fractal signal) – the indicator draws dotted line.

Appearance, colors, distance from signal bar maximum/minimum (is used to show breakout signal) and etc. trader can adjust using properties of the indicator.

Awesome Oscillator (AO) - is a 34-period simple moving average, plotted through the middle points of the bars (H+L)/2, which is subtracted from the 5-period simple moving average, built across the central points of the bars (H+L)/2. It shows us quite clearly what’s happening to the market driving force at the present moment.

Signals to buy

Saucer

This is the only signal to buy that comes when the bar chart is higher than the nought line. One must bear in mind:

• the saucer signal is generated when the bar chart reversed its direction from the downward to upward. The second column is lower than the first one and is colored red. The third column is higher than the second and is colored green.
• for the saucer signal to be generated the bar chart should have at least three columns.

Keep in mind, that all Awesome Oscillator columns should be over the nought line for the saucer signal to be used.

Nought line crossing

The signal to buy is generated when the bar chart passes from the area of negative values to that of positive. It comes when the bar chart crosses the nought line. As regards this signal:

• for this signal to be generated, only two columns are necessary;
• the first column is to be below the nought line, the second one is to cross it (transition from a negative value to a positive one);
• simultaneous generation of signals to buy and to sell is impossible.

Two pikes

This is the only signal to buy that can be generated when the bar chart values are below the nought line. As regards this signal, please, bear in mind:

• the signal is generated, when you have a pike pointing down (the lowest minimum) which is below the nought line and is followed by another down-pointing pike which is somewhat higher (a negative figure with a lesser absolute value, which is therefore closer to the nought line), than the previous down-looking pike.
• the bar chart is to be below the nought line between the two pikes. If the bar chart crosses the nought line in the section between the pikes, the signal to buy doesn’t function. However, a different signal to buy will be generated — nought line crossing.
• each new pike of the bar chart is to be higher (a negative number of a lesser absolute value that is closer to the nought line) than the previous pike.
• if an additional higher pike is formed (that is closer to the nought line) and the bar chart has not crossed the nought line, an additional signal to buy will be generated.

Signals to sell

Awesome Oscillator signals to sell are identical to the signals to buy. The saucer signal is reversed and is below zero. Nought line crossing is on the decrease — the first column of it is over the nought, the second one is under it. The two pikes signal is higher than the nought line and is reversed too.