CandleFocus Glossary Editor
The Aroon Oscillator is a technical indicator developed by Tushar Chande that is used to measure trend strength and identify trend changes. It is an indicator that combines two popular indicators, Aroon Up and Aroon Down, to create an oscillator. The input parameters used in the calculation are the length of the lookback period, or the number of periods to be used to determine high and low points in the market.
Aroon Up equals 100 times the number of periods since the last 25-period high divided by the total number of periods over the same time span. When Aroon Up is moving above Aroon Down, it indicates that the prior uptrend is likely to continue. Similarly, Aroon Down equals 100 times the number of periods since the last 25-period low divided by the total number of periods over the same time span. When Aroon Down is moving below Aroon Up, it indicates that the prior downtrend is likely to continue.
The Aroon Oscillator is displayed as a line graph showing the difference between Aroon Up and Aroon Down. A crossover above the zero line signals a bullish trend while a crossover below the zero line signals a bearish trend.
The Aroon Oscillator helps traders identify periods of increased activity (trend confirmation) or periods of decreased activity (indication of trend change). Strong momentum is indicated by readings close to +100 and −100 and weak momentum is indicated by readings close to zero. In addition, the oscillator shows how long a trend has been in motion, which can help traders determine if a trend is likely to continue or reverse.
In conclusion, the Aroon Oscillator is a powerful technical indicator that combines two core indicators in its calculation. It provides traders with an indication of trend strength and can help identify potential trend reversals.
Aroon Up equals 100 times the number of periods since the last 25-period high divided by the total number of periods over the same time span. When Aroon Up is moving above Aroon Down, it indicates that the prior uptrend is likely to continue. Similarly, Aroon Down equals 100 times the number of periods since the last 25-period low divided by the total number of periods over the same time span. When Aroon Down is moving below Aroon Up, it indicates that the prior downtrend is likely to continue.
The Aroon Oscillator is displayed as a line graph showing the difference between Aroon Up and Aroon Down. A crossover above the zero line signals a bullish trend while a crossover below the zero line signals a bearish trend.
The Aroon Oscillator helps traders identify periods of increased activity (trend confirmation) or periods of decreased activity (indication of trend change). Strong momentum is indicated by readings close to +100 and −100 and weak momentum is indicated by readings close to zero. In addition, the oscillator shows how long a trend has been in motion, which can help traders determine if a trend is likely to continue or reverse.
In conclusion, the Aroon Oscillator is a powerful technical indicator that combines two core indicators in its calculation. It provides traders with an indication of trend strength and can help identify potential trend reversals.