Awesome Oscillator

#momentum 

Inventor: Bill Williams 

Shows market momentum by comparing a fast 5-bar average with a slow 34-bar average of each bar’s midpoint (High+Low)/2. Plotted as a histogram around zero: green bars when momentum is rising, red bars when falling. 

Default period: 5, 34 

Histogram above zero indicates bullish momentum. Histogram below zero indicates bearish momentum. 

Useful readings: 

Crosses above zero: Momentum shifted to buyers 

Crosses below zero: Momentum shifted to sellers 

Green bars growing above zero: Uptrend gaining power 

Red bars growing below zero: Downtrend gaining power 

Saucer pattern (two falling red bars then a green bar, all above zero): Dip ending in an uptrend 

Twin peaks below zero (second peak higher): Downtrend losing power, bullish clue 

Price makes new high but AO peak is lower: Bearish divergence 

Objective rules: 

Bullish: AO crosses above zero. 

Bearish: AO crosses below zero. 

Saucer buy: AO above zero AND two falling bars followed by one rising bar 

Saucer sell: AO below zero AND two rising bars followed by one falling bar 

Twin peaks buy: Two AO troughs below zero, second trough higher than first, then a green bar 

What makes it unique: 

It uses bar midpoints instead of closes, reading the whole session’s balance rather than the final print. Its saucer and twin-peaks patterns are signals no other oscillator defines.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is available in the System Builder on RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

Default period: 5, 20

Default period: 20, 40

The indicator is applicable to all types of charting. It is calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin-Ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.