Juxtman
Member
The Awesome Oscillator is a great tool for technical traders to work with. It works well in indicating the direction of the mid-term trend.
This technical indicator is a momentum indicator which measures the distance between two moving averages, the 5-period and the 34-period Simple Moving Average (SMA). However, these moving averages are modified. Instead of basing the moving averages on the close of price, it is measured on the median of each candle. The oscillator then displays the difference between the two moving averages as a histogram.
Positive histogram bars occur when the shorter-term moving average is above the longer-term moving average, indicating a bullish trend. On the other hand, negative bars occur when the shorter-term moving average is below the longer-term moving average, indicating a bearish trend.
Aside from having positive or negative bars, the color of the Awesome Oscillators’ histogram bars also has some significance. The histogram bars are colored green whenever the current bar has a higher figure compared to the previous bar. If the current bar has a lower figure compared to the previous bar, then the bars are colored red. During a bullish trend, the bars would usually be green, and on a bearish trend, the bars would usually be red. However, whenever price is retracing, the moving averages tend to contract allowing a temporary color change.
This technical indicator is a momentum indicator which measures the distance between two moving averages, the 5-period and the 34-period Simple Moving Average (SMA). However, these moving averages are modified. Instead of basing the moving averages on the close of price, it is measured on the median of each candle. The oscillator then displays the difference between the two moving averages as a histogram.
Positive histogram bars occur when the shorter-term moving average is above the longer-term moving average, indicating a bullish trend. On the other hand, negative bars occur when the shorter-term moving average is below the longer-term moving average, indicating a bearish trend.
Aside from having positive or negative bars, the color of the Awesome Oscillators’ histogram bars also has some significance. The histogram bars are colored green whenever the current bar has a higher figure compared to the previous bar. If the current bar has a lower figure compared to the previous bar, then the bars are colored red. During a bullish trend, the bars would usually be green, and on a bearish trend, the bars would usually be red. However, whenever price is retracing, the moving averages tend to contract allowing a temporary color change.
