Aroon Oscillator is a trend-following indicator that illustrates the strength of the current trend and the trend’s potential to last.
The Aroon Oscillator can be constructed by subtracting Aroon Down from Aroon Up.
Aroon Oscillator = Aroon Up — Aroon Down.
Aroon Up = ((total number of periods — number of periods since highest close) / total number of periods) x 100
Aroon Down = ((total number of periods — number of periods since lowest close) / total number of periods)) x 100
Since Aroon Up and Aroon Down oscillate between 0 and +100, the Aroon Oscillator will oscillate between -100 and +100 with zero as the center crossover line.
Methods of use:
1. A positive value of the Aroon Oscillator indicates an uptrend; a negative value indicates a downtrend.
2. The higher the absolute value of Aroon Oscillator, the stronger the trend.
Note: When values are near the zero line, the trend is unclear.
