Aroon Oscillator

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DEFINITION of 'Aroon Oscillator'

A trend-following indicator that uses aspects of the Aroon indicator ("Aroon up" and "Aroon down") to gauge the strength of a current trend and the likelihood that it will continue. The Aroon oscillator is calculated by subtracting Aroon down from Aroon up. Readings above zero indicate that an uptrend is present, while readings below zero indicate that a downtrend is present.

INVESTOPEDIA EXPLAINS 'Aroon Oscillator'

Aroon up and Aroon down are the two components that comprise the Aroon indicator. The notion is that an asset is trending up when a stock is trading near the high of its range. Aroon up is used to measure the strength of the uptrend, while Aroon down is used to measure the strength of the downtrend. 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.

RELATED TERMS
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  3. Trend

    The general direction of a market or of the price of an asset. ...
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  6. Downtrend

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RELATED FAQS
  1. What are the differences between an Aroon indicator and an Aroon oscillator?

    The Aroon oscillator is an extension of the Aroon indicator. More accurately, it is an interpretation of the relationship ... Read Full Answer >>
  2. How can I build a trading strategy based on the Aroon indicator?

    One of the primary goals of technical market analytics is to identify performance trends in individual securities or indexes. ... Read Full Answer >>
  3. What is the difference between technical analysis and fundamental analysis?

    Fundamental analysis and technical analysis are distinct methods used to research and evaluate securities. Fundamental analysis ... Read Full Answer >>
  4. How are Tweezer patterns interpreted by analysts and traders?

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  5. How important are seasonal trends in the automotive sector?

    The automotive industry has some definite seasonal trends, with peak demand occurring in the spring and fall, and lowest ... Read Full Answer >>
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    Reconciliation is an accounting process that proves and documents that account balances are in agreement. It's a fundamental ... Read Full Answer >>
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