Awesome Oscillator explained simply and understandably. Better than the MACD histogram? with David Moadel
welcome to looking at the markets with David Modell here's an indicator you
might not have known about or thought about I'm on a quest to cover all the
indicators I've made videos on I think all of them MACD stochastics RSI
Bollinger Bands view app I've covered so many of them I'm gonna put in the
description below this video a playlist with my indicator videos and there are a
lot of them so please enjoy them check them all out by all means alright so
this one is called the awesome oscillator it looks pretty awesome the
awesome oscillator is a momentum indicator created by Bill Williams yeah
I noticed it's not much of a of an oversold overbought indicator like
Bollinger Bands might be or RSI or one of those or stochastics this one is
mostly from what I've seen used as a momentum indicator although you can use
it however you like here's the formula I got this from trading Viacom so I want
to give them credit and if you know what all this means hey awesome cool more
power to you you don't actually have to know every single detail of every
formula that you use as long as you know how to use it I believe I like to keep
it simple so what is the awesome oscillator it is a series of green and
red bars not these things these are the candlesticks it's down here it's below
the chart and again this is from trading veoh.com I want to give them credit so
it's a series of green and red bars below the chart and here's what it looks
like on an apple 5-minute candlestick chart but you can use it for doesn't
have to be for the five-minute chart swing traders can use it for the daily
candlestick chart whatever you like alright so here's what it looks like and
let's talk about it alright so a bar and I'm not talking about the candlesticks
talking about these bars here a bar is green when its value is higher than the
previous bar so if the value of the bar according to this formula okay if the
value of the bar the current bar is higher than the value of the previous
bar then it's going to be green and a bar is red when its value is lower than
the previous bar according to the formula pretty simple and this middle
line here it's called the zero line zero line as we can see there it is it's on
value zero it goes up to one and all the way down to negative one and the
fractions are in between or the decimals so how do you how can you use this well
it's really similar to the MACD histogram and I have a video on that
it's in my playlist which is in the description below this video
yeah it's similar to the MACD histogram it's bullish meaning the momentum is up
when the bars cross above the zero line this is the zero line right here in the
middle so when it when it's below but then crosses above the zero line then
that's an indication that the momentum is upwards and that's supposedly bullish
it's a bullish sign and it's bearish meaning the momentum is down when the
bars cross below the zero line so the bars are above the zero line in the
cross below that means that the momentum is downwards and that supposedly is a
bearish sign a bearish indication all right so don't get confused by the color
of the bars just because the bars are green that doesn't mean that it's above
the zero line I mean if you get a lot of green bars in in a row you know a bunch
of consecutive green bars eventually it's probably going to cross above the
zero line okay but just because the bars are green doesn't mean that it's above
the zero line all right you have to watch for the location of the bars watch
them go above all right when you like this hill here like a mountain
alright that's when it's above the zero line and
when you get this underground valley looking thing then it's below the zero
line and just because it's red doesn't mean it's below the zero line it could
be red but above the zero line green just means how the bar is the current
bar in relation to the previous bar that's all and that's what red also
means green means the current bar has a higher value than the previous bar and
red just means that the current bar has a lower value than the previous bar okay
so pretty simple and let's check out some examples here or at least one
example I showed you the Apple example this is tradingview calm I like it and
it's a good charting website I like a bunch of charting websites I like bar
chart calm I like stockcharts.com and today I tried I'm trying tradingview why
not so we can see it would have worked pretty well here this is US Steel
5-minute candlestick chart and we can see that it crossed above the zero line
here on the awesome indicator and so that could have been a buy signal right
about here and you would have done pretty well nice run up right that
doesn't mean that it works every time but it seemed to work pretty well here
it also crossed above here right about right about here and then you would have
enjoyed a little run up in the price there not too bad and then you could
possibly sell or even go short when it goes when it dips below the zero line
shorting is a risky proposition yeah I'm not gonna rent I'm not gonna recommend
that for beginners but anyway so it could be a possible buy and sell signal
based on momentum not so much overbought and oversold although I'm sure there's
an application for that as well alright so those are the basics with the awesome
oscillator do you like it do you like the awesome
oscillator do you think it's an interesting alternative to the MACD
histogram because it is pretty similar at
the way it looks in the way it works not the formulas so much but the appearance
at least is similar to the MACD histogram so if you liked this video
please give it a thumbs up on YouTube and leave a comment what indicators
indicators do you like do you like the awesome oscillator leave a comment below
this video and please subscribe to my You Tube channel and hit that Bell on
youtube so you can receive the latest updates on my financial educational
videos and if you want some help with indicators or putting together a trading
or investing plan because you got to have a plan otherwise you're asking for
problems you can email me anytime I like to help people my email address is David
Modell at gmail.com thank you so much I appreciate it and I'll talk to you again
soon