Aroon Oscillator (14)

The Aroon Oscillator (14) is a trend indicators indicator used in Skyrexio Strategy Builder for trend strength measurement and direction identification.

Introduction

The Aroon Oscillator (14) is a neutral trend indicator that combines both trend direction and strength measurement in a single oscillator. This indicator provides directional bias for both LONG and SHORT strategies while measuring the momentum behind recent highs and lows.

How Aroon Oscillator (14) Works

The Aroon Oscillator was developed by Tushar Chande as a single indicator that combines Aroon Up and Aroon Down into one oscillator. The calculation is: Aroon Oscillator = Aroon Up - Aroon Down, creating values that range from -100 to +100.

Aroon Oscillator characteristics: • Positive values indicate bullish momentum (recent highs dominate) • Negative values indicate bearish momentum (recent lows dominate) • Zero line crossovers signal potential trend changes • Extreme values (near ±100) indicate very strong directional momentum

Market Psychology: The Aroon Oscillator measures the "recency bias" of market highs and lows. Positive values show the market is making fresh highs more recently than lows, indicating bullish momentum. Negative values show fresh lows are more recent, indicating bearish momentum. This creates a clear directional bias unlike pure strength indicators.

Key Characteristics

Attribute	Details
Category	Trend Indicators
Type	Neutral Trend Direction & Strength Indicator
Primary Use	Trend direction identification and momentum measurement
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume analysis, price action, support/resistance

Strategy Applications

🟢 LONG STRATEGY (Primary Use)

Use Aroon Oscillator for LONG strategies when oscillator > 0 indicates bullish momentum and oscillator > 50 confirms strong upward trend.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: Strong bullish momentum confirmed
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 50

AND

First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Exponential Moving Average (21)
Timeframe: 1H

OR

Additional Entry 2: Momentum acceleration
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 70

AND

First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 55

Take Profit Orders (LONG)

Rule 1: Exit condition - Momentum weakening
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

OR

Rule 2: Exit condition - Bearish momentum developing
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0

OR

Rule 3: Exit condition - Extreme readings reversal
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -25

Stop Loss Orders (LONG)

Rule 1: Stop loss - Bearish momentum confirmed
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0

OR

Rule 2: Stop loss - Strong bearish reversal
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -50

OR

Rule 3: Stop loss - Volume confirms reversal
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

🔴 SHORT STRATEGY (Primary Use)

Use Aroon Oscillator for SHORT strategies when oscillator < 0 indicates bearish momentum and oscillator < -50 confirms strong downward trend.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H

First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Strong bearish momentum confirmed
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -50

AND

First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Exponential Moving Average (21)
Timeframe: 1H

OR

Additional Entry 2: Momentum acceleration downward
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -70

AND

First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 45

Take Profit Orders (SHORT)

Rule 1: Exit condition - Bearish momentum fading
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -25

OR

Rule 2: Exit condition - Bullish momentum developing
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0

OR

Rule 3: Exit condition - Oversold bounce risk
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 25

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Bullish momentum confirmed
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0

OR

Rule 2: Stop loss - Strong bullish reversal
First Condition: Aroon Oscillator (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 50

OR

Rule 3: Stop loss - Volume surge against position
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (50)
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Aroon Oscillator

Setup

Timeframe Alignment:

• Daily: Aroon Oscillator direction for major trend bias

• 4H: Aroon Oscillator momentum for intermediate trend

• 1H: Aroon Oscillator execution with volume confirmation

Execution

Entry: 1H zero line cross + higher timeframe alignment Target: Oscillator extreme reversal or zero line cross Stop: Oscillator reversal against position

Momentum Acceleration Strategy

Aroon Oscillator Momentum Framework:

Stage 1: Initial Signal (±25)

• Weak momentum emerging

• Use small position sizes

• Require additional confirmation

Stage 2: Confirmed Momentum (±50)

• Moderate momentum established

• Standard position sizing

• Add to positions if aligned

Stage 3: Strong Momentum (±70)

• Strong directional bias

• Can use larger positions

• Prepare for potential reversal

Stage 4: Extreme Momentum (±85)

• Very strong momentum

• Consider profit-taking

• Watch for reversal signals

Execution Framework:

• Base Order: Zero line cross with volume

• Additional: Momentum acceleration stages

• Take Profit: Extreme readings or momentum fade

• Stop Loss: Zero line cross against position

Risk Management Guidelines

Position Sizing Based on Oscillator Level

Oscillator Level	Position Size	Strategy Type	Risk Level
±70 to ±100	Reduced (reversal risk)	Momentum/Reversal	High
±50 to ±70	Full size	Trend following	Low
±25 to ±50	Standard size	Trend following	Medium
-25 to +25	Minimal/Avoid	Range trading	High

Aroon Oscillator Reliability

High Reliability

✅ Zero line cross with volume confirmation ✅ Multi-timeframe oscillator alignment ✅ Sustained oscillator levels >50 or <-50 ✅ Confirmation with price action

Low Reliability

❌ Oscillator oscillating around zero ❌ Conflicting timeframe signals ❌ Low volume with oscillator signals ❌ Extreme readings without follow-through

Best Practices

For LONG Strategies

1. Zero line cross - Wait for oscillator to cross above 0 for bullish bias

2. Volume confirmation - Ensure volume supports the momentum shift

3. Momentum stages - Use oscillator levels to gauge trend strength

4. Multi-timeframe - Verify alignment across different timeframes

For SHORT Strategies

1. Bearish cross - Wait for oscillator to cross below 0 for bearish bias

2. Momentum persistence - Look for oscillator staying below -25

3. Volume validation - Confirm with increased volume on breakdown

4. Extreme caution - Be careful at extreme negative readings

Common Mistakes to Avoid

• Ignoring zero line - The zero line is the key directional signal

• Chasing extremes - Don't enter at extreme oscillator readings

• No volume confirmation - Always validate with volume analysis

• Single timeframe - Use multiple timeframes for confirmation

Market Conditions Analysis

Market Type	Aroon Oscillator Effectiveness	Recommended Approach
Strong Uptrend	🟢 High (Oscillator > 50)	LONG trend following
Strong Downtrend	🟢 High (Oscillator < -50)	SHORT trend following
Ranging Markets	🟡 Medium (Oscillator ±25)	Mean reversion
Choppy Markets	🔴 Low (Oscillator around 0)	Avoid trading
Breakout Markets	🟢 High	Follow oscillator direction

Related Indicators

Indicator	Relationship	Link
Aroon Up	Bullish component	Aroon Up
Aroon Down	Bearish component	Aroon Down
ADX	Trend strength comparison	ADX
MACD	Similar oscillator concept	MACD

Conclusion

Aroon Oscillator (14) is a dual-purpose indicator that provides both trend direction and strength measurement. Its primary value lies in identifying clear directional bias while measuring the momentum behind recent price extremes.

Key Takeaways

• PRIMARY USE: Trend direction identification with momentum measurement

• SECONDARY USE: Zero line crossovers for trend change signals

• DIRECTIONAL NATURE: Provides clear bullish/bearish bias unlike pure strength indicators

• ALWAYS: Confirm with volume and multi-timeframe analysis

Success with Aroon Oscillator requires understanding that it combines the best of both Aroon Up and Aroon Down into a single, easy-to-interpret oscillator. Use zero line crossovers for direction and extreme readings for momentum assessment.

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