Aroon Oil Technical Indicator Oil Technical Analysis and Aroon Indicator Trading Signals

Developed by Tushar Chande

This technical indicator is used to determine if a instrument is trending or not.

It is also used to indicate how strong the oil trend is.

It is also used to identify the starting of a trend, the name its name which means morning or dawn.

This technical indicator has two lines:

• Aroon UP Indicator
• Aroon DOWN Indicator

Aroon UP Indicator

Percentage of time between the start of a time period and the highest point that crude oil price has reached during that period.

If crude oil price sets a new high, Aroon UP Indicator will be 100 - for each new high it will stay at 100. However, if crude oil price moves down by a certain percentage, then that percentage is subtracted from the 100 and Aroon UP Indicator starts to move down. This means that if Aroon UP Indicator stays at 100 then crude oil price is making new highs but when it starts to move down then crude oil price is not making new highs.

If however crude oil price is making new lows for a particular crude oil price period then Aroon UP Indicator will be at zero

Calculation

Aroon UP Indicator is a percentage of time between crude oil price period and highest point.

If you use 10 crude oil price periods for calculation:

Example 1: Highest crude oil price was 1 day ago

Then if the highest point was yesterday, i.e. 1 day before then

10 crude oil price periods minus 1 day= 9

9/10 in percent terms = 90

Aroon UP Technical Indicator will be at 90

Example 2: Highest crude oil price was 5 days ago

If the highest point was 5 days ago then

10 crude oil price periods minus 5 = 5

5/10 in percent = 50

Aroon UP Indicator will be at 50

Aroon DOWN Indicator

This is calculated the same as Aroon UP Technical Indicator but this time using the lowest point instead of highest point.

When a new low is set Aroon DOWN Indicator is at 100 & when a new high is set it will move to zero.

Oil Trading Technical Analysis & Generating Trading Signals

This technical indicator uses the 50% level to measure momentum of the trend.

Buy Oil Trading Signal & exit signal

Aroon UP Indicator above 50 is a technical buy oil trading signal

Aroon UP Indicator dipping below 50 is an exit signal if you had opened a buy oil trade.

Sell Oil Trading Signal & exit signal

Aroon DOWN Indicator below 50 is a technical sell oil trade signal.

Aroon DOWN Indicator rising above 50 is an exit signal if you had opened a sell oil trade.

Buy & Sell Trading Signals