You enter on a strong green momentum bar. The histogram is pushing up, the oscillator agrees with your idea, and you are in. Then the candle closes, the bar you acted on turns red and shrinks, and the burst of momentum you trusted was really just the middle of a candle that reversed before it printed. The signal did not lie. You read it before it was finished.
The Awesome Oscillator is built to measure exactly that momentum, and it rewards traders who wait for the bar to settle. By the end of this guide you will be able to read whether momentum is building or fading, tell a real signal from an unfinished one, and know which of its three classic reads to trust in a trend versus a range.
Key Findings
- AO measures the gap between fast and slow momentum: it subtracts a 34-period moving average from a 5-period one, both taken on each candle's midpoint, and plots the difference as a histogram.
- Two layers of information: the zero line shows which side momentum sits on, and the green or red color of each bar shows whether that momentum is rising or falling right now.
- Three signals, three traps: the zero-line cross, the saucer, and twin peaks each work in a trend and mislead in a range, so they are context reads, not automatic triggers.
- The history does not repaint, the live bar does: past bars lock at each candle's close, but the current bar can flip color before it prints, so a mid-candle read is not a settled signal.
What does the Awesome Oscillator actually measure?
The Awesome Oscillator measures the difference between short-term and longer-term momentum as a histogram around a zero line. It takes a fast 5-period average and a slow 34-period average, subtracts the slow from the fast, and draws the result as a bar. When recent momentum runs ahead of the broader trend, the bar sits above zero. When it falls behind, the bar drops below.
One detail sets it apart from most oscillators, and it matters. The averages are not built on the closing price. They use the median price of each candle, the midpoint between its high and its low. The idea is that the midpoint captures where a candle actually traded rather than where it happened to finish, which can be a wick-driven accident. That makes the AO a read on the body of the market’s activity, not just its closing snapshot.
It was introduced by the trader and author Bill Williams in his 1995 book Trading Chaos, as one piece of a larger system for reading market momentum and structure. For our purposes the single histogram does the heavy lifting: it is your running check on whether the push behind price is gathering or draining away.
How is the Awesome Oscillator calculated, and what do the colors mean?
The math is simple enough to hold in your head. For every candle the platform takes the median price, then keeps a 5-period and a 34-period simple average of those medians, and subtracts one from the other. That single number becomes the height of the bar.
The color is a second layer of information that people often miss. A bar is green when it is taller than the bar before it and red when it is shorter. Color tracks the direction of change, not the value. So you can have a green bar below the zero line, which means momentum is still negative but improving, or a red bar above zero, meaning momentum is positive but starting to cool. Reading height and color together is the whole skill.
What do the three classic Awesome Oscillator signals tell you?
Three reads have followed the AO since Williams first described it. None is a standalone entry.
The zero-line cross is the bluntest. When the histogram crosses from below zero to above, short-term momentum has overtaken the longer-term trend, a bullish shift; a cross the other way is bearish. It is clean in a trending market and treacherous in a range, where the line will whip back and forth across zero and hand you a string of false starts.
The saucer is more refined, because it stays on one side of zero and only reads the color. In the bullish case the histogram is already above zero, you get two or more red bars stepping down, and then a green bar turns back up. That dip-and-resume hints that momentum paused with the trend rather than reversing against it. It is a way to rejoin a move without waiting for a full zero cross.
Twin peaks is the divergence read. Two peaks form on the same side of zero, and the second is lower than the first while price pushes the other way. That gap between price and momentum warns the move is running out of force. We break the same disagreement down for a different tool in the RSI divergence strategy ; the logic carries over cleanly to the AO.
RelicusRoad Pro
Have you been trading for a while but have never made consistent profits or are you new to FOREX trading and want to get a head start? Try RelicusRoad and you'll never look back.
Get RelicusRoad ProAwesome Oscillator vs MACD: what is the difference?
Both tools are momentum histograms built from the gap between a fast and a slow average, so traders reasonably ask which to run. They answer the same question from slightly different seats.
| Factor | Awesome Oscillator | MACD histogram |
|---|---|---|
| Price input | Median price (high + low ÷ 2) | Closing price |
| Averages | 5 and 34 simple | 12 and 26 exponential |
| Signal line? | No, read off zero and color | Yes, MACD line vs signal |
| Bar color rule | Green if higher than prior bar, red if lower | Usually value vs signal, or vs prior |
| Main reads | Zero cross, saucer, twin peaks | Zero cross, signal cross, divergence |
| Feel | Faster, rawer response | Smoother, more filtered |
The practical difference is temperament. The AO reacts a touch quicker and gives you the color layer for free, which is why it appeals to traders who want an early feel for a shift. MACD adds a signal line and leans on the close, so it filters more and lags a little more. Neither wins outright. If you want the full side-by-side on that pairing, the MACD vs RSI comparison and our note on leading versus lagging indicators both dig into the trade-off between early and reliable.
Does the Awesome Oscillator repaint?
A correctly built Awesome Oscillator does not repaint its history. Once a candle closes, its median price is set, its place in both moving averages is fixed, and the bar behind the current one does not move again. Mark a bar from yesterday, reload the chart, and it should be exactly where you left it.
The live bar is a different story, and it is the honest catch with any momentum histogram. While the current candle is still forming, its high and low keep changing, so its median keeps changing, so the AO bar grows, shrinks, and can flip from green to red before the candle prints. That is not repainting, and it is not a flaw. It simply means a signal you read mid-candle is provisional until the close confirms it. The trader who acts on a green bar three seconds into a candle is trading a number that has not finished being calculated. We laid out the full non-repaint test in the non-repaint forex indicator guide , and it applies here without change: judge the signal at the close, not before it.
How does RelicusRoad Pro use confirmed momentum?
RelicusRoad Pro treats momentum the way a careful AO reader does by hand, only without the discipline gap. Rather than leaving you to eyeball a histogram and decide by feel whether the current bar has settled, it commits each read at the candle’s close and holds it there, on the non-repaint side of the line above. The same logic runs across MT4, MT5, and TradingView, so a momentum read you trust on one platform is the read you get on the next. It also folds this into a wider confluence check, so momentum is one confirmed input rather than a lone trigger, in the spirit of the Money Flow Index guide where volume plays the same supporting role.
None of that is sold as automatic trading, and the honesty matters. A clean momentum read tells you when a move has force behind it and when it is coasting. It cannot tell you whether your idea was sound to start with, and it will not fix loose risk. That part stays with you. What it removes is the oldest trap in reading an oscillator: acting on a bar before the candle that draws it has closed.
Frequently asked questions
What is the Awesome Oscillator indicator? The Awesome Oscillator is a momentum indicator that shows the difference between a 5-period and a 34-period simple moving average as a histogram around a zero line. Both averages are calculated on the median price of each candle, the midpoint between its high and low, not the close. It was introduced by the trader and author Bill Williams in his 1995 book Trading Chaos. Bars above zero mean short-term momentum is running ahead of the longer-term trend; bars below zero mean it is lagging behind.
How is the Awesome Oscillator calculated? For each candle the platform takes the median price, the high plus the low divided by two. It then builds a 5-period and a 34-period simple moving average of those median prices and subtracts the slow one from the fast one. The result is plotted as a histogram bar. Each bar is colored green when it is higher than the bar before it and red when it is lower, so color tracks the direction of change rather than the value itself.
What is the difference between the Awesome Oscillator and MACD? Both are momentum histograms built from the gap between a fast and a slow average, but they differ in the details. The Awesome Oscillator uses simple moving averages of the median price and has no signal line, so you read it off the zero line and the bar colors. MACD uses exponential averages of the closing price and adds a signal line, giving you a second crossover to trade. The AO tends to react a touch faster and rawer; MACD is smoother and more filtered.
Does the Awesome Oscillator repaint? A correctly built Awesome Oscillator does not repaint its history. Once a candle closes, its median price is fixed and its contribution to the moving averages is locked, so past bars do not redraw. The catch is the live bar: while the current candle is still forming, its median price keeps changing, so the AO bar can grow, shrink, and even flip color until the candle closes. That is normal, not a fault, but it means a signal you read mid-candle is not settled until the close confirms it.
What are the saucer and twin peaks signals? The saucer looks for a momentum shift while the histogram stays on one side of zero: on the bullish version, bars are above zero, you get at least two red bars falling and then a green bar turning back up, suggesting momentum is resuming with the trend. Twin peaks looks for two peaks on the same side of zero where the second is closer to the line than the first, a divergence-style warning that the move is losing force. Both are context reads, best used with price structure rather than on their own.
The Awesome Oscillator will not call the turn for you. It tells you when momentum is building behind a move and when price is drifting on borrowed force, provided you read the bar once the candle has closed.
See how RelicusRoad Pro reads confirmed momentum across MT4, MT5, and TradingView →