Filter AO Indicator

Filter AO Indicator

Filter AO is a trend detecting oscillator. It uses a histogram to display the trend changes and give buy and sell signals. The trading tool offers three trading techniques for self-confirmation.

Many indicators give great trading signals but require other confirmation tools. The Filter AO is an excellent (read awesome) trading tool that establishes some kind of confluence without depending on other external tools. It gives suitable trend entry and exit points, shows market momentum, and predicts future movements. It is ideal for scalping.

How Filter AO Works
There are various strategies for using the indicator. There are three strategies for using the indicator, the zero line crossovers, twin peak, and the saucer strategy.

In general, buy when:
the indicator crosses above the zero line;
it draws red histograms followed by a short red histogram. The third one is green, and the fourth provides a good entry point (saucer);
two troughs appear, with the second peak high than the preceding peak.
The sell signal appears when:
the indicator crosses below the zero line;
a short green histogram follows a blue histogram. A third is red. The fourth bar provides an ideal trade entry point;
two peaks with the second one lower than the preceding.
Filter AO Trading Example

The EURO against the Great Britain pound on a 4-hour time frame is a good example of the filter awesome oscillator. The buy signal occurs when the indicator crosses above the zero line.

The indicator gives a sell signal by forming a saucer. Green histogram bars shorten before red elongated bars form. Therefore, you should enter short positions and exit when the bars change color to green.

Conclusion
The name says it all. This indicator is just awesome. Filter AO displays red bars when the market is in a downtrend, while green bars indicate buy signals. And you can use any of three trading strategies to identify suitable entry and exit points.