The Aroon Oscillator is simply the difference between the Aroon Up and the Aroon Down. The Aroon Up measures the strength of the uptrend, while the Aroon Down measures the strength of the downtrend. The values plotted for each Aroon line are calculated as follows:
Aroon Up = ((n- Days Since n-day High)/n) x 100
Aroon Down = ((n – Days Since n-day Low)/n) x 100
Aroon Oscillator = Aroon Up - Aroon Down
n is simply the number of days in a given period. For example, if we were plotting the Aroon Up for a 25 day period, n would simply be 25 (ie. Aroon Up = ((25-Days Since 25-day High)/25) x 100).
The Aroon Oscillator swings between values of -100 and 100 (0 being the middle line). When the oscillator is in positive (negative) territory, this hints towards an uptrend (downtrend). The Oscillator would move closer towards 100 (-100) as the upward (downward) trend becomes stronger. When the Oscillator is closer to 0, this suggests the stock is going through a period of price consolidation.
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