Aroon Oscillator

#trendstrength #oscillator 

Inventor: Tushar Chande 

Simply Aroon Up minus Aroon Down, shown as one line moving between -100 and +100. It squeezes the two Aroon lines into a single easy reading: positive means uptrend, negative means downtrend. 

Default period: 25 

Line above zero indicates bullish trend. Line below zero indicates bearish trend. Line near zero indicates no trend. 

Useful readings: 

Above +50: Strong uptrend 

Below -50: Strong downtrend 

Hovering between -50 and +50: Weak or sideways market 

Rising through zero: Trend turning up 

Falling through zero: Trend turning down 

Stuck near zero for many bars: Range market, use range tools instead 

Objective rules: 

Bullish: Oscillator crosses above zero. 

Bearish: Oscillator crosses below zero. 

Strong bullish filter: Take longs only when oscillator is above +50 

Strong bearish filter: Take shorts only when oscillator is below -50 

Chop filter: Skip signals if oscillator crossed zero more than twice in last 10 bars 

What makes it unique: 

It collapses the two Aroon time-counts into one line where zero cleanly separates bull from bear. It keeps Aroon’s unique time-based logic in the simplest possible display. 

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.