STA Blog

Do you know Aroon? I do, but not very well

I’m not one to promote or push one form or another of technical analysis – especially when it comes to oscillators. I find the choice of what to use – and what’s rubbish – can lead to heated arguments. Personally, I prefer to stick as closely as I can to price action as what I really, really want to see is fear and greed. But I have to admit that, when markets are a bit ‘blah’ as I’m finding them this year, I need crutches.
But with so little momentum I’m finding my usual favourites have little to add. I don’t use anything secret or special, just the usual stuff in a bog-standard tool box. The usual suspects, like a couple of moving averages (which I’ll happily ditch when I feel like it), MACD, RSI. When things get really tough the Commodity Channel Index and Aroon.

The latter, I see rarely in generally available analysis. Whether it’s unknown or unused, I don’t know. But if it’s the former, here’s a quick summary for you to catch up and then test out to see if it’s for you.
According to Investopedia.com, a site I can recommend (and another good one is Stock Charts), it’s a way of measuring when a market’s trending and how strong the tendency is.

https://www.investopedia.com/terms/a/aroon.asp

Developed by Tushar Chande relatively recently (hence me thinking some readers might not have heard of the method), it consists of two lines covering (usually) a 25-day period which move between 0 and 100: the up one, how long it’s been since a new recent high, the down one, time since a new low. Therefore, up line above down line equals bullish and vice versa. Line crossovers suggest a change in trend.

The attached chart is hopefully a market you’re not familiar with, the Swedish krona against the euro. I find this helps one approach a new technical analysis method with a neutral frame of mind. I’ve also added the MACD so you can see the similarities between these methods.

Posted in Finance, Markets, STA news, Technical Analysis, Trading, Trending
Tags: , ,
One comment on “Do you know Aroon? I do, but not very well
  1. Trevor Neil says:

    Aroon is great. It shows the direction and strength of a trend and, unlike the ADX, reacts well to breakouts. It looks odd and requires effort to understand it but, once mastered, it is extremely powerful.
    I promote it as an underrated indicator

Leave a Reply

Your email address will not be published.

Disclaimer

The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA. The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. None of the information on the STA’s blog constitutes investment advice.

Not ready to join? Stay Updated

If you want to learn more about membership and being part of the STA, sign up for our updates so we can keep in touch.

  html
  text

Monthly Meetings

The STA holds 11 monthly meetings in the City of London, including a summer and Christmas party where canapés and refreshments are served.

MORE INFO

Latest Videos

As a service to our members, many of whom are unable to attend all our monthly meetings, we have been making videos of meeting presentations for several years.

MORE INFO

STA Libraries

The STA has an extensive library of classic technical analysis texts. There are over 1000 books in the collection. It is held at the Barbican Library with a smaller...

MORE INFO

Market Technician

Latest research and news

More Info

World Class Tutors

STA Course Lecturers

More Info

Membership

Be part of something special

More Info

Blog

View latest posts

More Info