The AO plots its data using a histogram, similar to how the MACD histogram functions, in that it delivers a buy and sell signal when the bars pass above or below the neutral 0 line.
The "Saucer" is a pattern for a buy signal occurring when the histogram bars are higher than the zero line.
A saucer signal is triggered when there are three consecutive histogram bars above 0, the first two of which must be red, while the third is green and higher than the previous red bar.
BTC produced such a signal beginning July 17 through July 24, 2017, when two red bars formed above the zero line followed by a green bar a week later on July 31.
"Twin peaks" are also a signal to buy that can be generated when the histogram bars are below the zero line.
The signal is produced when two "Peaks" are formed below zero and the second peak is closer to the neutral zero line than the first.
A bullish signal flashed by AO following twin peaks on the weekly chart on Dec. 17, 2018, officially marked the end of the bear market.
It's worth noting that if the pattern is above the neutral line and the second peak is lower than the first then the same conclusion can be drawn for a sell signal as that would mean declining momentum for buyers.
As mentioned previously, the crossover for a histogram bar from below 0 to above is a buy signal and conversely when it passes below 0 from above, that would be an indication to sell.
While some traders prefer multiple indicators for buy signals on their charts, others prefer a more simplistic setup and if that speaks to you then the Awesome Oscillator has got you covered.
Using the Awesome Oscillator to Find Bitcoin Buy and Sell Signals
Published on Jul 21, 2019
by Coindesk | Published on Coinage
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