AROON Oscillator

What

The Aroon is a trending indicator used to measure if a security is in a trend and the magnitude of that trend. The indicator can also be used to identify when a new trend is set to begin.

The higher the value of the oscillator from the centerline point, the more upward strength there is in the security and the lower from the centerline the more downward pressure.

How

The Aroon oscillator simply plots the difference between the Aroon-up and -down lines. This line is plotted between a range of -100 and 100. The centerline at zero in the oscillator is considered to be a major signal line determining the trend.

When

Many traders will watch for a cross above the zero line to suggest the beginning of a new uptrend. Conversely, a cross below zero would indicate the start of a downtrend. Readings near zero suggest that a security may be trending sideways and that this period of consolidation could continue.