Awesome Oscillator (AO)
fast_period = 5 (3–20) • slow_period = 34 (20–100) Overview
The Awesome Oscillator was developed by legendary chartist Bill Williams, who described it as the "best momentum indicator" that is "as simple as it is elegant." It compares recent market movements to historic market movements by calculating the difference between a 34-period and 5-period simple moving average of the median price.
The AO is displayed as a histogram oscillating around a zero line, with color coding providing immediate visual feedback. Green bars indicate increasing momentum while red bars show decreasing momentum, regardless of the oscillator's position relative to zero. This fixed-parameter indicator (5 and 34 SMAs) cannot be adjusted - a decision Bill Williams kept to himself.
Interpretation & Trading Signals
Twin Peaks Pattern:
- Bullish Twin Peaks: Two peaks below zero, second peak higher (less negative) than first, followed by green bar
- Bearish Twin Peaks: Two peaks above zero, second peak lower than first, followed by red bar
- Key Rule: Histogram must remain on same side of zero between peaks
- Signal Strength: Green bar after bullish twin peaks often precedes zero line break
Saucer Pattern:
- Bullish Saucer: Above zero - red bar, smaller red bar, green bar (momentum change)
- Bearish Saucer: Below zero - green bar, smaller green bar, red bar
- Purpose: Identifies optimal entry points in trending markets
- Requirement: All bars must be on same side of zero line
Zero Line Crossover:
- Bullish Cross: AO moves from below to above zero - bullish momentum shift
- Bearish Cross: AO moves from above to below zero - bearish momentum shift
- Reversal Signal: Often indicates potential trend reversal against previous direction
- 2025 Note: Best combined with other indicators to avoid false signals
Example Usage
Code examples will be available once the Rust implementation is complete.
Performance Analysis
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