STA Blog

I’m not one to promote or push one form or another of technical analysis – especially when it comes to oscillators. I find the choice of what to use – and what’s rubbish – can lead to heated arguments. Personally, I prefer to stick as closely as I can to price action as what I really, really want to see is fear and greed. But I have to admit that, when markets are a bit ‘blah’ as I’m finding them this year, I need crutches.
But with so little momentum I’m finding my usual favourites have little to add. I don’t use anything secret or special, just the usual stuff in a bog-standard tool box. The usual suspects, like a couple of moving averages (which I’ll happily ditch when I feel like it), MACD, RSI. When things get really tough the Commodity Channel Index and Aroon.

The latter, I see rarely in generally available analysis. Whether it’s unknown or unused, I don’t know. But if it’s the former, here’s a quick summary for you to catch up and then test out to see if it’s for you.
According to Investopedia.com, a site I can recommend (and another good one is Stock Charts), it’s a way of measuring when a market’s trending and how strong the tendency is.

https://www.investopedia.com/terms/a/aroon.asp

Developed by Tushar Chande relatively recently (hence me thinking some readers might not have heard of the method), it consists of two lines covering (usually) a 25-day period which move between 0 and 100: the up one, how long it’s been since a new recent high, the down one, time since a new low. Therefore, up line above down line equals bullish and vice versa. Line crossovers suggest a change in trend.

The attached chart is hopefully a market you’re not familiar with, the Swedish krona against the euro. I find this helps one approach a new technical analysis method with a neutral frame of mind. I’ve also added the MACD so you can see the similarities between these methods.