Aroon Oscillator
The Aroon Oscillator is a trend-following indicator to gauge the strength of a current trend. It uses aspects of the Aroon indicator like the Aroon Up & Aroon Down and is the difference between them. Besides that, this oscillator helps traders analyse whether a trend will continue.
In This Article
What is the Aroon Oscillator?
How To Analyse Chart Using the Aroon Oscillator
Category
Trend
Type
Leading
What is the Aroon Oscillator?
This trend indicator is the difference between the Aroon Up and Aroon Down. Traders can use it to measure the strength of a trend and whether the stock price is trending.
Developed in 1995 by Tushar Chande, it helps measure the number of periods since the last 25th-period low and high. Before drawing this indicator on a chart, it’s vital to calculate the Aroon Up and Aroon Down.
Aroon-Up = [(Period Specified – Periods Since the Highest High within Period Specified) / Period Specified] x 100
Aroon-Down = [(Period Specified – Periods Since the Lowest Low for Period Specified) / Period Specified] x 100
Aroon Oscillator = (Aroon Up - Aroon Down)
How To Analyse Chart Using the Aroon Oscillator
This indicator oscillates between -100 and +100 with zero as its middle line. The Aroon Up, Aroon Down, and Aroon oscillator are plotted for easy comparison.
The latter is the difference between the prior two. An uptrend is present when the Aroon oscillator’s reading is above zero. Conversely, a downtrend is present when the Aroon oscillator is below zero.
Moreover, the farther away the zero line is from the Aroon oscillator, the stronger the trend. When the Aroon Up is above 70, it shows a strong uptrend. Traders like to buy in such scenarios.
On the other hand, when Aroon Down is above 70, it points towards a strong downtrend. Traders like to sell in such situations.
Related Articles
Aroon Indicator
Developed by Tushar Chande, the Aroon indicator helps indicate if an asset is trending or is in a trading range. Besides that, this technical indicator reveals the beginning of a new trend and its strength. It moves between 0 and 100. Traders can ...Ultimate Oscillator
It is a technical analysis indicator that measures the price momentum of an asset across multiple timeframes. This indicator, developed by Larry Williams in 1976, represents short, medium, and long-term trends. The multi-timeframe objective of this ...Money Flow Index
Overview – The Money Flow Index is an indicator that computes the flow of money into and out of security during a specific period. It is measured by positive and negative Money Flow Values which creates a money ratio. The Money Ratio is later on ...Fast Stochastic Indicator
Fast Stochastic is a technical indicator that measures the moments of the prices in the market. Technical analysts use this to identify overbought and oversold situations through their price moments. By using KEEV, you can analyse the Fast Stochastic ...Triple Exponential Average
It is a momentum indicator that shows traders the percentage change in the moving average that has been smoothened exponentially three times. The TRIX is a powerful indicator that helps traders to identify the overbought and oversold conditions in an ...