Awesome Oscillator (AO)

The Awesome Oscillator (AO) is a momentum indicator developed by Bill Williams that measures market momentum by comparing recent price action to a longer-term benchmark. It calculates the difference between a 5-period and 34-period Simple Moving Average of the bar's midpoints (H+L)/2.

AO uses midpoint prices rather than close prices:

AO = SMA((High + Low) / 2, 5) - SMA((High + Low) / 2, 34)

AO oscillates around zero. Positive values mean short-term momentum exceeds long-term; negative means the opposite.

• Above 0 — Bullish momentum (short-term MA above long-term)
• Below 0 — Bearish momentum (short-term MA below long-term)
• Green bars — AO is rising (increasing momentum)
• Red bars — AO is falling (decreasing momentum)
• No user parameters — Uses fixed 5 and 34 period SMAs

Buy signals

• AO crosses above 0 (zero-line crossover)
• "Saucer" setup: two consecutive green bars below zero
• Twin peaks: bullish divergence with two troughs below zero

Sell signals

• AO crosses below 0 (zero-line crossover)
• "Saucer" setup: two consecutive red bars above zero
• Twin peaks: bearish divergence with two peaks above zero

| Parameter | Default | Description | |-----------|---------|-------------| | — | — | No user-configurable parameters |

| Condition | Meaning | |-----------|---------| | AO > 0 | Bullish momentum | | AO < 0 | Bearish momentum | | AO cross_over 0 | Momentum shifted bullish | | AO cross_under 0 | Momentum shifted bearish |

• AO is a key component of the Bill Williams trading system
• The "saucer" signal is considered more reliable than simple zero-line crossovers
• Combine with the Alligator indicator for Williams' complete trading system
• AO histogram colors help visualize momentum acceleration/deceleration
• Works on all timeframes, but daily charts provide the most reliable signals