Awesome Oscillator (AO)
A histogram of the gap between two timeframes of momentum — short-term against medium-term — with each bar colour-coded by direction of change, turning the chart into a direct visual narrative of momentum.
Overview
The Awesome Oscillator (AO) was introduced by Bill Williams in Trading Chaos (1995). For each bar it takes the midpoint — the average of high and low — and plots the difference between a 5-period and a 34-period simple moving average of those midpoints, drawn as a histogram around zero.
Two design choices give AO its character. First, it uses the midpoint rather than the close, treating the full range of the bar as part of the momentum signal. Second, each bar is coloured green if it is higher than the previous bar, red if lower — so the histogram conveys not just the level of momentum but its rate of change, at a glance.
Williams was a trader who brought chaos theory into market analysis, and AO was designed as one of his instruments for catching non-linear turning points in crowd behaviour.
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