Home / STRATEGY REVIEWS / Awesome Oscillator (AO) with Relative Strength Index (RSI) Combo Forex Strategy
RSI AND OSCILLATOR

Awesome Oscillator (AO) with Relative Strength Index (RSI) Combo Forex Strategy

Awesome Oscillator (AO) with Relative Strength Index
(RSI) Combo Forex Strategy

 

 

There are many types of trader in forex market. E.g. Position Trader, Breakout
Trader, Pull back Trader, Swing Trader, Momentum Trader and Novish Trader
etc.

If you are Momentum Trader this Awesome Oscillator with Relative Strength
Index (RSI) Combo Forex Strategy is for you. It will help you to catch and ride
Momentum properly.

Before explore this Awesome Oscillator with Relative Strength Index (RSI)
Combo Forex Strategy at first we have to know details of Awesome Oscillator
and Relative Strength Index (RSI)

What is Awesome Oscillator?

Bill Williams developed Awesome Oscillator.

Awesome Oscillator usage was to measure the momentum in the Forex
market (or any market) by using a combination of:

34 period simple moving average of the median of the previous 34
candlesticks

5 period simple moving average of the median of the previous 5 candlesticks

Zero line plus histogram

Calculation:

Awesome Oscillator is a 34-period simple moving average, plotted through
the central points of the bars (H+L)/2, and subtracted from the 5-period
simple moving average, graphed across the central points of the bars
(H+L)/2.

MEDIAN PRICE = (HIGH + LOW) / 2
AO = SMA (MEDIAN PRICE, 5) – SMA (MEDIAN PRICE, 34)

 

Where:

MEDIAN PRICE — median price;
HIGH — the highest price of the bar;
LOW — the lowest price of the bar;
SMA — Simple Moving Average.

 

Identify Trend with Awesome Oscillator:

Uptrend: When Awesome Oscillator is above the zero line that means its
uptrend because as per Awesome Oscillator calculation Median Simple
Moving Average (SMA) 5 crossed Median Simple Moving Average (SMA) 34
from below.

Downtrend: When Awesome Oscillator is below the zero line that means its
downtrend because as per Awesome Oscillator calculation Median Simple
Moving Average (SMA) 5 crossed Median Simple Moving Average (SMA) 34
from above.

When the histogram is rising green, we can determine that the Awesome
Oscillator value of this candlestick if higher than the previous

When the histogram is falling red, the value of the Awesome Oscillator is less
than the previous candlestick

Twin Peak: When Awesome Oscillator shown divergence then its call twin
peak.

What is Relative Strenght Index (RSI)?

Relative Strength Index (RSI) developed by J. Welles Wilder. Its also momentum
indicator. You can easily catch and ride momentum via Relative Strength Index
(RSI).

RSI oscillates between zero and 100.

According to Wilder, RSI is considered overbought when above 70 and oversold
when below 30.

 

Signals can also be generated by looking for divergences, failure swings and
centerline crossovers. RSI can also be used to identify the general trend.

 

Calculation of Relative Strength Index (RSI):

100
RSI = 100 – ——–
1 + RS

 

RS = Average Gain / Average Loss

The very first calculations for average gain and average loss are simple 14-period
averages:
 First Average Gain = Sum of Gains over the past 14 periods / 14.
 First Average Loss = Sum of Losses over the past 14 periods / 14
The second, and subsequent, calculations are based on the prior averages and the
current gain loss:

 Average Gain = [(previous Average Gain) x 13 + current Gain] / 14.
 Average Loss = [(previous Average Loss) x 13 + current Loss] / 14.

Lets explore Awesome Oscillator with Relative Strength Index (RSI) Combo
Forex Strategy

Image 1:RSI OSCILLATOR

 

Awesome Oscillator with Relative Strength Index
(RSI) Combo Forex Strategy (BUY)

Image point number – 1, We see price goes down massively. As per
Awesome Oscillator with Relative Strength Index (RSI) Combo Forex Strategy
(BUY) rules this time we have nothing to do only observe.

Image point number – 2, Awesome Oscillator shown consecutively RED. As
per Awesome Oscillator with Relative Strength Index (RSI) Combo Forex Strategy (BUY) rules this time we have nothing to do only observe. We need
more confirmation.

Image point number – 3, Relative Strength Index (RSI) are in over sold area.
But As per Awesome Oscillator with Relative Strenght Index (RSI) Combo
Forex Strategy (BUY) rules this time we have nothing to do only observe. We
need more confirmation.

Image point number – 4, Price created Lower Low. It’s s a chance to create
divergence if Awesome Oscillator will create Lower High. Lets CHECK…..

Image point number – 5, WOW……. Awesome Oscillator create Lower High.
Its DIVERGENCE. As per Awesome Oscillator with Relative Strength Index
(RSI) Combo Forex Strategy (BUY) rules this time we have to do if Awesome
Oscillator turned GREEN and Relative Strength Index (RSI) above oversold
area same time or within two candlesticks.

Image point number – 6, EXCELLENT…… Awesome Oscillator turned GREEN
and Relative Strength Index (RSI) above oversold area same time.
As per Awesome Oscillator with Relative Strength Index (RSI) Combo Forex
Strategy (BUY) rules, its BUY signal.

Image point number – 7, Aggressive or conservative trader put their BUY
STOP order 2 pips above Awesome Oscillator turned GREEN and Relative
Strength Index (RSI) above oversold area candlesticks.

Image point number – 8, After hit BUY STOP order aggressive trader place
STOP LOSS 2 pips below of Awesome Oscillator turned GREEN and Relative
Strength Index (RSI) above oversold area candlesticks.

Image point number – 9, Conservative traders place STOP LOSS 2 pips below
of Swing Low.

Image point number – 10, Conservative or aggressive trader place their take
profit level on near swing High or 1 : 2 or 1 : 3 risk reward ratio.

 

Image 2:RSI AND OSCILLATOR

 

 

Awesome Oscillator with Relative Strenght Index (RSI)
Combo Forex Strategy (SELL)

Image point number – 1, We see price goes up massively. As per Awesome
Oscillator with Relative Strength Index (RSI) Combo Forex Strategy (SELL)
rules this time we have nothing to do only observe.

Image point number – 2, Awesome Oscillator shown consecutively GREEN.
As per Awesome Oscillator with Relative Strength Index (RSI) Combo Forex
Strategy (SELL) rules this time we have nothing to do only observe. We need
more confirmation.

Image point number – 3, Relative Strength Index (RSI) are in over bought
area. But As per Awesome Oscillator with Relative Strength Index (RSI)
Combo Forex Strategy (SELL) rules this time we have nothing to do only
observe. We need more confirmation.

Image point number – 4, Price created Higher High. It’s s a chance to create
divergence if Awesome Oscillator will create Higher Low. Let’s CHECK…..

Image point number – 5, WOW……. Awesome Oscillator creates Higher Low.
Its DIVERGENCE. As per Awesome Oscillator with Relative Strength Index
(RSI) Combo Forex Strategy (SELL) rules this time we have to do if Awesome
Oscillator turned RED and Relative Strength Index (RSI) below over bought
area same time or within two candlesticks.

Image point number – 6, EXCELLENT…… Awesome Oscillator turned RED
and Relative Strength Index (RSI) below over bought area same time.
As per Awesome Oscillator with Relative Strength Index (RSI) Combo Forex
Strategy (SELL) rules, its SELL signal.

Image point number – 7, Aggressive or conservative trader put their SELL
STOP order 2 pips above Awesome Oscillator turned RED and Relative
Strength Index (RSI) below over bought area candlesticks.

Image point number – 8, After hit SELL STOP order aggressive trader place
STOP LOSS 2 pips above of Awesome Oscillator turned RED and Relative
Strength Index (RSI) below over bought area candlesticks.

Image point number – 9, Conservative traders place STOP LOSS 2 pips above
of Swing High.

Image point number – 10, Conservative or aggressive trader place their take
profit level on near swing Low or 1 : 2 or 1 : 3 risk reward ratio.

Check Also

Triangle Pattern with Alligator Indicator Confluence Strategy (Part-1)

Triangle Pattern with Alligator Indicator Confluence Strategy (Part-1)

Triangle Pattern with Alligator Indicator Confluence Strategy (Part-1)   Friends……. It’s our great pleasure to …

5 comments

  1. I was recommended this website by my cousin. I’m not sure whether this
    post is written by him as no one else know such detailed about my trouble.
    You’re incredible! Thanks!

  2. I am not sure where you are getting your info, but great topic.

    I needs to spend some time learning more or understanding more.

    Thanks for fantastic info I was looking for this information for my mission.

  3. My family every time say that I am killing my time here at net, but I know I am
    getting know-how everyday by reading such pleasant
    content.

  4. A motivating discussion is worth comment. There’s no doubt
    that that you need to write more about this subject matter, it may not be a taboo matter but generally people do not speak about such subjects.
    To the next! Cheers!!

  5. These are actually enormous ideas in about blogging.
    You have touched some pleasant points here. Any way keep up wrinting.

Leave a Reply

Your email address will not be published. Required fields are marked *