Aroon-Oscillator

The Aroon Oscillator is another in the long line of oscillators that many people have heard of and utilize. This particular indicator ranges between negative one hundred and positive one hundred, using zero as the mid point. As you can guess, a positive oscillator will indicate to you a bullish trend and a negative oscillator will indicate to you a bearish trend.

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Reviewed by Ellen Johnson

Breaking down how the oscillator works further, when the oscillator is greater than zero, that indicates the price of your chosen equity is making new highs more than it is making new lows. Flipping that around, if the oscillator is reading a negative number, that means that price is making new lows more than making new highs. How many people use this is to identify trends and direction. Some great tools to use this with would be a nice momentum indicator as with that, you can gauge how much steam is behind the move in either direction. If you’re looking for a top chart plot, maybe take a look at Bollinger Bands or regression channels as that can help to focus your trading.

Overall, this is a popular and well recognized tool, but just like any new tool, be sure to use it on a demo account and adjust it accordingly. These tools may not fit your current trading style or investing style and that is perfectly acceptable. When in the demo account, take a look at the other tools and see if this matches nicely with a momentum indicator to help you determine a strong trend. If you still have questions, reach out to an investing community and they can help with any questions or fine tuning you may have. Again, this is a reputable tool and has been around for quite some time, so give it a try and see how it works.

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