Awesome Oscillator

The classical description of the indicator looks like that:

"Awesome Oscillator (AO) determines market momentum (the second of five market dimensions) at a given time on the last 5 bars, comparing them to the momentum on the last 34 bars".

In other words, it is the colored version of MACD without signal line and the opportunities to make changes in the period.



The selection process of averaging periods is impossible to understand. Bill Williams doesn't tell anything about it, except that if he had the super computer, he would prove everything. The other strange thing is that figures 5 and 34 are not used in the Alligator.
You should notice that the indicator gives signals when crossing two averages 5 and 34. So, wittingly losing signal is given. And even if you test this indicator on history, it loses with the speed of the spread.

Anyway, if you decided to use such crossings of averages, you'd better take averages. Or, MACD — in the last resort. In this way you'll be able to average out divergence.