Aroon Oscillator

Parameters: period = 25 (10–100)

Overview

The Aroon Oscillator is a momentum indicator that measures trend strength and direction by calculating the difference between Aroon Up and Aroon Down lines. It simplifies the dual-line Aroon system into a single oscillator that swings between -100 and +100, providing clear signals about market conditions and the dominant force driving price movements.

Readings above zero indicate that an uptrend is present (recent highs occurring more frequently than lows), while readings below zero indicate a downtrend is present. The distance from zero reflects the strength of the trend, making it easy to assess both direction and momentum at a glance.

Interpretation & Trading Signals

Zero Line Crossover Signals:

  • Bullish Crossover: Oscillator crosses above zero - signals new uptrend, growing buyer control
  • Bearish Crossover: Oscillator crosses below zero - indicates fresh downtrend beginning
  • Pullback Strategy: Look for pullbacks to zero line after crossovers to enter with momentum
  • Lag Warning: Oscillator turns positive/negative after prices have already moved

Trend Strength Zones:

  • +40 to +100: Clear bullish trend - strong upward momentum
  • -40 to -100: Clear bearish trend - dominant selling pressure
  • Above +50: Strong upward momentum - big price moves likely
  • Below -50: Strong downward momentum - significant decline
  • Near Zero: Consolidation and lack of trend - sideways market

Advanced Trading Strategies:

  • Extreme Thresholds: +90/-90 for strongest signals (Aroon Up 90-100, Down 0-10)
  • Trend Following: Buy on zero cross, trail stops below higher lows, exit below -75
  • Divergences: Price/oscillator divergences warn of potential trend changes
  • Zero Line Monitoring: Swings back to zero during trends signal weakness

Example Usage

Code examples will be available once the Rust implementation is complete.

Performance Analysis

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