Aroon oscillator

Aroon oscillator indicator was created by Tushar Chande.

Aroon oscillator is an indicator used to determine whether there is a trend movement in the market or not.
Aroon oscillator indicator is based on Aroon up and Aroon down lines.Aroon up is mostly indicated using blue line while Aroon down is mostly indicated using red line.
Since Aroon oscillator indicator is an oscillator,it therefore has an oscillation at point 0 ranging from 0 to 100.

Aroon oscillator has a period of 25.

Aroon oscillator is calculated using the following formula;

Aroon oscillator= Aroon up - Aroon down

where as
Aroon up = ((25-periods since 25 period high)/25)*100;

Aroon down = ((25-periods since 25 period low)/25)*100;

Since Aroon oscillator indicator is a trend oscillator with an oscillation at point 0 ranging between 0 to 100,it therefore follows that when Aroon(up) oscillator crosses aroon down above 0 then the trader should be trading upwards while when the Aroon(down) oscillator crosses aroon up below 0,then the trader should be trading downwards.On the other hand,if aroon up crosses aroon down at above 50,that will be an indication of an overbought market thus the trader should exit any buy position and enter a sell position since the market will start moving downwards while if aroon down crosses aroon up at below 50,that will be an indication of an oversold market thus the trader should exit any sell position an enter a buy position since the market will start moving upwards.This is indicated from the candle sticks chart below;




From the candle sticks chart above,there is point A,point B,aroon down(with red line) and aroon up(with blue line) indicated using the red arrows.
At point A,aroon down has crossed aroon up at below 50 thus an indication of an oversold market at that point thus signaling the trader to exit any sell position and enter a buy position since the market was starting an upward trend while at point B,aroon up has crossed aroon down at above 50 thus an indication of an overbought market at that point thus signaling the trader to exit any buy position and enter a sell position since the market was starting a downward trend .

Recommendation:If you are a day trader,use 1 min,5 min,15 min and 30 min timeframe while if you are a swing trader just use 1 hour and above timeframe if you want aroon oscillator indicator to work well for you.

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