Streamlining Trend Trading: Dominating Trends with the Awesome Oscillator

Trends are the lifeblood of profitable trading, but navigating them can often be challenging. That’s where the Awesome Oscillator comes into play. With its unique ability to visualize the momentum behind price movements, this indicator provides a clear and intuitive way to identify and confirm trends precisely.

As the name implies, this strategy is mainly based on the Williams Awesome oscillator. The method is simple: we want to trade the signal (color) the Awesome oscillator shows. However, to maximize the accuracy of signals, we will only trade the signals of the Awesome Oscillator in the direction of the already established trend.

What is the already established trend?

To identify that, we use a 55-period moving average. This comes with a twist as we adjust the shift period forward to 21.

This 55-period moving average is now the indicator of the main trend. When the price is above it, the trend is bullish. When the price is below it, the trend is bearish.

Let’s now look at a chart example.

As you can see, the price is above the 55 moving average. Thus, we look to trade only green bars on the Awesome oscillator. As long as the price stays above the moving average, all green bars from the Awesome oscillator are valid entry points for long trades.

When the Awesome oscillator turns red, it’s time to exit the trade. As soon as it turns back green again and the price is above the 55 SMA, we should re-enter long.

For bearish setups, it’s exactly the opposite.

Indicators used for the Streamlining Trend Trading strategy:

• 55-period simple moving average, shift forward 21 periods
• Bill Williams Awesome oscillator