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Indicators: Aroon oscillator - dynamic zones (levels)

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Automated-Trading
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99093
Automated-Trading 2016.11.28 09:06 

Aroon oscillator - dynamic zones (levels):

Aroon oscillator — that is using dynamic levels/zones instead of using fixed levels for overbought and oversold conditions.

Author: Mladen Rakic

Mladen Rakic
15600
Mladen Rakic 2016.11.28 11:04  

Even though the default calculating periods of Aroon oscillator are usually set to 25 (as described here :

Aroon-Up and Aroon-Down measure the number of periods since price recorded an x-day high or low. Aroon Up is based on time and price highs. Aroon Down is based on time and price lows. For example, 25-day Aroon-Up measures the number of days since a 25-day high, while 25-day Aroon-Down measures the number of days since a 25-day low. These indicators are shown in percentage terms and fluctuate between 0 and 100. The Aroon Oscillator is simply Aroon-Up less Aroon-Down. The default parameter in SharpCharts is 25 and the example below is based on the 25-day Aroon Oscillator.

longer periods of calculations can be very useful when switching the usage of Aroon oscillator from a kind of momentum indicator to a kind of trending indicator. An example of 50 period Aroon oscillator is probably self explanatory - and with the dynamic levels, it becomes even more obvious how it can become a "trending" indicator instead of "search for reversals" default mode of operation :


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