How to Use Trading Zones in Crypto
2024-10-13

Hello, Skyrexians!

Last two articles were the deep dive into the Awesome Oscillator and Acceleration Deceleration indicators by Bill Williams. In conjunction with the fractals and the alligator these indicators are the powerful concept in cryptocurrency trading. It can significantly boost your cryptocurrency trading strategy, crypto trading algorithm or you can implement it into trading bot. Today we will expand this concept with the trading zones - the periods on the market with the bullish or bearish superiority. 

Trading zones is not the popular concept in comparison to Awesome Oscillator, that's why using it can give you a huge advantage in crypto trading because even top crypto traders don't use it in their trading routine. Let's go through its concept.

Before start observing the trading zones concept we have to understand what are the Awesome Oscillator and Acceleration/Deceleration. Awesome oscillator is the approximation of the market's driving force. Usually it starts moving before the price if this is an impulsive wave. During corrections it can flash the false signals. Before the driving force starts moving the acceleration changes its direction. That's why combination of these indicators is so important. 

 What is the trading zone? 

As you know from AO and AC descriptions they can have 2 conditions: increasing (greed bars) and decreasing (red bars). According to this we can define 3 marker conditions:
 
 Green zone. Both AO and AC have the increasing columns. This is the strong bullish phase. Only long trades are allowed.
 Red zone. Both AO and AC have the decreasing columns. This is the strong bearish phase. Only short trades are allowed.
 Gray zone. AO and AC have the different directions. No signals can be generated by this trading zone
 

