Bill Williams is known as a famous trader, financial analyst, and author of numerous amounts of works regarding trading. One of them was called the Awesome oscillator from Bill Williams. Generally speaking, this indicator is very similar to the well-known MACD indicator. But the single difference, implemented by its author, exists. In particular, he has proposed to consider the middle prices instead of the closing prices.
Description of Awesome oscillator from Bill Williams
The binary options’ indicator reflects the balance of the driving power in a market in the short-term in relation to the long-term. Five outermost periods are taken into consideration as the short-term periods, and the long-term period is 34. As we have already mentioned above, the Awesome oscillator from Bill Williams is similar to the MACD indicator. Its similarity is based on the fact that all of the oscillations occur round the level of 0.
The main difference of this indicator from the MACD indicator lies in the fact that it doesn’t have the signal line, and the length of its lines is fixed. Apart from that, it has no differences from the known indicator. Generally, this is its main disadvantage.
This indicator is very similar to the MACD indicator on a chart too. It has the same diagrams which appear either higher or lower than the signal line. Technically, the standard MACD can be also used for trading in the financial markets because it is more familiar to many traders.
Trading signals of Awesome oscillator from Bill Williams
The simplest signals sent by this indicator appear when the histogram is located either higher or lower than the signal line. If it is located higher and changes direction from the descending to the ascending one, the signal to buy the Call option appears. At the same time, you have to follow the showings and the color of the histogram carefully. The signal to buy the Call option appears when the first column is of any color, the second one is red, the third one is green and is higher than the second one.
The similar and the inverted signal is formed when the histogram is located higher than the zero level. And the first column may have any color, the second has to be green, the third has to be red and located lower than the second one. In this case, the signal to buy the Put option appears.
Another fairly simple type of signals appears when the histogram crosses the neutral line. If the crossing occurs from down to up, the signal to buy the Call option will appear. The first column of the histogram has to be located lower than the neutral line, and the second one has to be located higher than it.
As for the Put signal, it appears when the histogram crosses the neutral line from up to down. In this case, the first column has to be higher than the neutral line, and the second one has to be lower. In this case, the trend is descending, so you can buy the Put option.
If the next minimum on a chart is higher than the previous one and, at the same time, the histogram is located in the negative zone, the signal to buy the Call option will appear because the ascending trend is expected in the market. The same signal for the Put option exists too. In this case, if the histogram forms the next maximum lower than the previous one and, at the same time, is located higher than the zero level, the Put option can be bought. It’s important to remember that in both first and second cases, the maximums and the minimums have to follow each other. Otherwise, the signal will lose its strength. If, for example, one or two columns are located between them, such signal should not be considered.