Aroon oscillator is a expansion of Aroon indicator. It is calculated by
subtracting the Aroon Down from the Aroon Up. The resultant number will
oscillate between 100 and -100.
Aroon Oscillator Formula
Aroon Oscillator = AroonUp – AroonDown.
Trading signals for the Aroon Oscillator:
- Above zero signals an up-trend.
- Below zero indicates a down-trend.
- The farther away Aroon Oscillator is from the zero line, the stronger the trend.
- Above 50 is considered a strong uptrending market
- Below -50 means that the market is trending lower.
- Near 0 means that the market is in transition and not trending.
- Above 50 means strong uptrend.
- Below 50 means strong downtrend.
A decrease of the Aroon Oscillator from
above the 50 line shows that the uptrend is consolidating and is
reversing direction downward. When the Aroon Oscillator hovers around
the zero line over time, then the market is in a directionless period.
When the oscillator moves toward -50
from the zero line, the market is beginning to trend downward. And when
the Aroon Oscillator is below -50, then the market is in a strong
downtrend.
When the oscillator begins to move
upward towards the zero line, the downward trend is slowing down and
beginning to reverse direction.
In addition, when the Aroon Oscillator
moves higher from the zero line, then the market is moving from a period
of non-trending to a period of uptrending.
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