Technical indicators / Aroon Oscillator

Formula

Trading use

The number of signals generated by Aroon Oscillator is significantly smaller than created by Aroon Indicator. So it is better to use it for filtration rather than for decision-making in the market.

The main values of Aroon Oscillator are extremes reached by the indicator within a trend movement and also the moment of crossing zero line..

When Aroon Oscillator is above 50, it indicates a strong bullish trend.

At the same time it is important to consider the following:

• you should open deals according to the price direction (in this case orders to buy will prevail);
• you should use trend-following trading strategies and systems.

When Aroon Oscillator is below -50, it indicates a strong bearish trend.

It is important to take into consideration the following:

• you should open deals according to the price direction (in this case orders to sell will prevail);
• you should use trend-following trading strategies and systems.

Aroon Oscillator above 50 and below -50 indicates a strong new trend. In this instance, using counter-trend or flat market methods would be inappropriate.

Another option to use the oscillator is trading in the direction of the breakout of zero line:

• the indicator crossing up through zero line indicates that the price uptrend is likely to continue;
• the indicator crossing down through zero line suggests that that the price downtrend is likely to remain.