The Aroon Oscillator is an MT4 trend indicator that helps forex and stock traders identify trend-following buy-sell signals.
Apart from generating real-time trend signals, it also plots colorful demonstrations of the strengths/weaknesses of the current market trend. It works on MTF charts. Also, technical traders prefer Aroon Oscillator for day/intraday trading because of its steady trend signals.
The indicator works best on shorter MT4 timeframes like M5 to H1 charts. It is capable of adjusting to multiple timeframe charts, enabling it to assess scalping and intraday trading opportunities simultaneously.
Technically, the oscillator works best when merged with trend-following trading strategies. Alternatively, you can apply basic chart analysis tools alongside the indicator for building your own trading strategy.
Buy Signal Generation with Aroon Oscillator
The Aroon Oscillator bars that turn above the zero level indicate a bullish market trend. Once the while bars turn blue, it signals a solid and steady bullish trend condition of the market.
In the above EURUSD chart example, we’ve added horizontal support alongside the Oscillator signals. The strategy is to find a potential setup with price level and trend confirmations.
When the Aroon Oscillator value turns positive, and the bars become blue, only look for possible long opportunities. Once the price rejects the current support, activate the buy order with a stop-loss below the respective support level.
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Sell Signal Generation with Aroon Oscillator
Apart from anticipating pullback entries, you can also apply Aron Oscillator for breakout trading.
Like the above GBPUSD chart example, first, wait for market consolidation. Next, look for a price breakout within the current trend direction.
As you can see, once the Oscillator bars signal a bearish trend, the price also breaks below the recent market low. We consider it a perfect sell opportunity following the solid price breakout.
Consider a sell exit right after the Aroon Oscillator value turns positive, indicating an upcoming bullish trend.