The simple "Awesome Oscillator"-developed by American trader Bill Williams-helps traders take indications of a trend that's suddenly going to become popular. The AO, according to Coin Desk, uses data through a histogram, where it farms indications for a buy and sell signal when the bars pass through above or below the neutral line, indicated by the number '0'.
That, however, is just one of the app's main features. There are other features which mostly involves taking stock of an asset's surge as well as taking any change noticed via patterns, as they appear on the histogram.
The indicator is best used when the daily and weekly charts are taken a closer look at. It also performs best when it comes to tracking crypto values, data from reports suggested.
The Awesome Oscillator saw action when bitcoin started pinging for a signal during its recent surge.
Two red bars formed above the zero lines from July 17 through July 24, leading to a green bar which appeared on July 31. Prior to this, bitcoin has slowly been making progress, rising from $3,200 at the end of July to around $20,000 when tracked in a 5-month period.
The problem is when the Awesome Oscillator suddenly shows a trend in the red, like what happened for Interm Corp Bond Vanguard (VCIT), which showed a five-day consistent downtrend.
This was a signal of building market momentum aimed toward the shares, The Stock Minute reported.
The interpretation of the Awesome Oscillator is said to be similar to the MACD, including the "buy" pattern which is when the oscillator crosses through the zero lines to the upside and to "sell" when it crosses back to the below mark. Followers are warned, however, about crossing and mixing signals, which could result in choppy markets or flat selling.
To avoid this, buyers and sellers are encouraged to watch the Average Directional Index (ADX) for market movement. This is a technical analysis indicator which is used to watch the market for trending signals or if it is not trending. The ADX measures trend strength but no direction. Many traders use this alongside other indicators for more accuracy.
The indicator had been used to predict an end to the bear market that bitcoin enjoyed in 2018. It had also been instrumental in marking the beginning of 2019's bull run. Again, following the indications falls on the discretion of the analyst, so it's better to study market signs first and compare it with the Awesome Oscillator's reading.
