Specifically, the Accelerator Oscillator is the difference between the Awesome Oscillator and moving average of a period of 5. Essentially, the Accelerator tells us the rate of change of the Awesome. The AC possesses just a single line , and unlike a lot of the other oscillators which aim to catch potential reversals, the AC does not have any overbought or oversold levels. It can also be a useful indicator to keep a trader out of the market; if the AC histogram is red, longs should not be considered, and if the histogram is green, shorts should not be considered.
When trading the twin peak strategy, traders enter a possible new trend early. When combined with the ATR , the Awesome Oscillator twin peak signals can be traded with definitive price exit targets so traders can enjoy the full rewards of an early entry. The aptly named Awesome Oscillator is an amazing technical analysis indicator designed to measure the underlying market momentum as well as to confirm trends and anticipate reversals. In the above example, AMGN experienced a saucer setup and a long entry was executed.
He is also the man who developed the AC indicator, which is why you should definitely consider using it. According to the man himself, the accelerator indicator is the earliest possible predictor of market forces and trader attitudes. Using it will grant a smart trader an edge over the others that cannot be simply ignored. Bill Williams is a deeply respected professional in the field, with years of experience in stock, commodity and Forex trading. His opinions are highly regarded among all traders and, if you intend to be one, you should definitely consider learning more about him. And attempt to understand the basis for them, you need to know one thing.
As you have probably already guessed, of the three most common awesome oscillator strategies, we vote this one the highest. The reason being, the twin peaks strategy accounts for the current setup of the stock. The twin peaks are also a contrarian strategy as you are entering short positions when the indicator is above 0 and buying when below 0.
Another advantage of the awesome oscillator is its usage in determining divergence. If the AO histogram crosses above the zero line, that is indicative of bearish momentum. Conversely, when it is crossing below, that is indicative of bearish momentum.
It is desirable for Awesome Oscillator bars and Accelerator Oscillator ones to be the same color. In case it is not so, it is better to refrain from trading if there is no obvious perspective to enter the market. Bill Williams designed the Accelerator Oscillator to provide as early as possible indications of a possible trend change, rightly suggesting that this would give traders a significant market advantage. This indicator is good at quantifying the market driving force, that is, the factor that makes the price move in one direction or another.
Remember that the price is the last thing that will change on the market just as the behaviour of this ball. Before the direction of bars on the graph changes, the momentum will change first, and the change of accelerator which will be preceded by the change of the volume will take place previously. But everything starts with the fact that we – traders – will make our own trading decisions, so everything starts with us. Like Awesome Oscillator, Accelerator Oscillator was also developed by Bill Williams.
Markets are constantly moving, and its ability to sustain price movement in one direction is called market momentum. The term is used to define a function of change in price over a specified period against trade volume, meaning higher volumes have more impact on the momentum of price actions. However, market momentum is also a measure of the market’s sentiment towards certain events, and it’s only through understanding the market that traders can think ahead of it.
You do not need to keep track of any lines or do any complex calculations. What you do need to do is keep track of the colours that are given to you on the chart. The two are green and red and are well representative of theacceleration deceleration oscillatorand what information it provides. You see, when the colour of the chart is red, that means that the market forces on an asset or a currency are decelerating and you should not buy that specific stock.
The bar colours of the Awesome Indicator are based on indicator values within a certain period. Thus, it is possible to have red bars above zero, and green bars below zero. A rising green histogram indicates that the Awesome Oscillator value is higher than the previous bar, whereas a falling histogram indicates that Awesome Oscillator value is lower than the previous bar. For example, you have a ball, and you push it to roll across the road. Gradually it will start to slow down until it stops for a fraction of second and changes its direction to the opposite one and its accelerator starts to grow again.
You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. The MACD or “Moving Average Convergence / Divergence” indicator is a momentum oscillator used to trade trends. MACD plots the distance between moving averages and helps traders identify trend… So, we have the Awesome Oscillator histogram, which shows us the driving force, but to estimate whether the price is accelerating towards it or not we will need Accelerator Oscillator. So you see that bars are quite high on the Awesome Oscillator histogram, the bars are outside the Alligators jaws, but Accelerator Oscillator is almost invisible at the same time.
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Bill has also developed other popular indicators like the alligator, fractals, and the the easiest day trading strategy. The reason the awesome oscillator indicator works so well with the e-Mini is that the security responds to technical patterns and indicators more consistently due to its lower volatility. In the above example, there were 7 signals where the awesome oscillator indicator crossed the 0 line. Depending on your charting platform, the awesome oscillator indicator can appear in many different formats.
In fact, most indicators have a hard time with small-cap investments, but this makes it near impossible to use the Awesome Oscillator in crypto markets without pairing it with more reliable tools. Accelerator/Decelerator Oscillator indicator helps you to detect changes in momentum, by measuring the acceleration or deceleration of the driving force. Oscillators change direction before the driving force, which in turn changes before the price.
The chart below shows the awesome oscillator applied in the daily chart of the EUR/USD pair. Compare that with the MACD indicator which generated far more signals and inevitably far more false signals. If you’re interested in learning more about the MACD indicator, we recommend studying the MACD Trend Following Strategy- Simple to learn Trading Strategy which is an out-of-the-box trend following strategy.
Traders might open a short position during the third bar or after the fourth forms, provided it is also red. This strategy is based on watching for moments the awesome oscillator crosses over or under the zero line. When the AO crosses above the zero-line, short term momentum is indicated to be increasing faster than long term momentum, and traders may be prompted to enter a long position. The Awesome Oscillator makes use of simple moving averages to confirm or deny market trends. Learn how to confirm those trends and predict possible reversals in our AO guide. Trading strategies usually require multiple technical analysis indicators to increase forecast accuracy.
Sell when the Accelerator Oscillator forms at least 2 consecutive red bars below 0. Accelerator Oscillator is calculated as the difference between the Awesome Oscillator and 5-period simple moving average of the Awesome Oscillator. The Bill Williams Accelerator Oscillator is an indicator that measures whether momentum is likely to continue. When you add the indicator, it opens up a window at the bottom of the platform, like most other oscillators. It has a zero line, showing whether it’s going to be easier for acceleration or deceleration to increase in momentum. The indicator is calculated like most oscillators are, using a couple of moving averages.
Just like any other technical indicator, the Awesome Oscillator isn’t perfect. There are times when it reports low market momentum while the price continues to make new highs and high momentum signals during consolidatory movements. Using the Awesome Oscillator is far from a foolproof strategy against the market, but sometimes analyzing convert new zealand dollars these discrepancies can offer more profound insight. The twin peaks strategy is also quite versatile and applicable to both bullish and bearish markets. This is because markets tend to rise more often than they fall, meaning bull markets can last longer than bear markets, giving growing markets more time to build momentum.
It’s necessary to watch both the value and the color of the indicator’s bars. Notice that there’s a difference between the Awesome Indicator and the Accelerator Oscillator. Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information. Adding the Bill Williams Accelerator Oscillator to your Metatrader platform is simple.
AO calculations are based on the median price while the MACD is calculated using the closing price. The saucer strategy focuses on identifying movement in three consecutive periods on the same side of the zero line. When the converse situation occurs and the histogram’s value sits below the zero line, the short-term 100 gbp to zar exchange rate average is less than the long-term average and a bearish market is indicated. When the five-day SMA is greater than the 34-period SMA, the value generated in the histogram is above the zero line and a bullish market is indicated. Use indicators after downloading one of the trading platforms, offered by IFC Markets.