In the financial markets, the awesome oscillator can be used to generate various trading signals, such as buy or sell signals. This is particularly useful for short-term trading strategies where traders look to enter and exit positions as quickly as possible.
A common awesome oscillator trading strategy is to use the zero-line crossover to interpret signals. As discussed, a bullish crossover occurs when the oscillator crosses above the line, whereas a bearish crossover occurs when the oscillator crosses below the line. These both suggest a possible reversal against the previous price trend. If an asset’s price decreases below the zero line, traders may be more likely to open a short position, instead of a long position, which may be more favourable when the price starts to increase to above the zero line.
Another popular awesome oscillator trading strategy is to look for bullish and bearish ‘saucers’ on price charts. These show rapid momentum changes in three or more bars at once that are either above or below the zero line. A bullish saucer occurs when the awesome oscillator is above the zero line and there are two red bars, the second being smaller than the first, which is followed by a green bar. A bearish saucer works the other way around, with two green bars below the zero line, the second being smaller than the first, followed by a red bar.