Trading the cryptocurrency market using Aroon oscillator indicator

# Trading the cryptocurrency market using Aroon oscillator indicator

Aroon oscillator is a crossover oscillator indicator.

As a crossover oscillator indicator,Aroon oscillator indicator was created by Tushar Chande with the main objective of helping cryptocurrency traders to know the direction of the cryptocurrency market as well as to identify overbought and oversold points. As a crossover oscillator indicator,Aroon oscillator indicator is based on Aroon up and Aroon down lines.Aroon up is mostly indicated using blue line while Aroon down is mostly indicated using red line.

Since Aroon oscillator indicator is an oscillator,it therefore has an oscillation at point 0 ranging from 0 to 100.

Aroon oscillator normally uses  a period of 25. With this period,its value is calculated as follows;

Aroon oscillator= Aroon up - Aroon down

where as

Aroon up = ((25-periods since 25 period high)/25)*100;

Aroon down = ((25-periods since 25 period low)/25)*100;

1. Aroon oscillator oversold cryptocurrency

Since Aroon oscillator is a crossover oscillator with an oscillation at point 0 ranging between 0 to 100,it therefore follows that when Aroon(down) oscillator crosses aroon up at above 0.00 then the cryptocurrency trader should be trading in a  downward direction .Furthermore,if aroon down crosses aroon up at below 50,that will be an indication of an oversold market thus the cryptocurrency trader should buy a given amount of cryptocurrency. The cryptocurrency trader can either decide to use a market buy order which will be processed instantly or they can decide to use a limit buy order which will be processed when the market reaches their limit buy order. This is being shown from below chart;

The above is a price analysis of TRX in terms of USDT. Three points are being indicated. There is point A ,point B and point C. Point A is the Aroon down while point B is the Aroon up. On the other hand,point C is the oversold crossover point. At point C,the Aroon down has crossed above Aroon up at below 50 thus an indication of an oversold condition over that point.This signals the cryptocurrency trader to buy a given amount of TRX with their USDT balance.As a cryptocurrency trader,one can either place a market buy order or a limit buy order. The market buy order is being executed when the order is being placed while the limit buy order is being processed when the price in the market reaches the limit buy order price. When the order is being placed and the market starts moving upwards,then the account of the traders will start increasing in value.

2. Aroon oscillator overbought cryptocurrency

Since Aroon oscillator is a crossover oscillator with an oscillation at point 0 ranging between 0 to 100,it therefore follows that when Aroon(up) oscillator crosses aroon down at above 0.00 then the cryptocurrency trader should be trading in an upward direction .Furthermore,if aroon up crosses aroon down at above 50,that will be an indication of an overbought market thus the cryptocurrency trader should sell a given amount of cryptocurrency which he/she might have previously purchased and is currently holding so that when the market starts moving downward,their account do not decline in value. The cryptocurrency trader can either place a market sell order which will instantly be processed or they can place a limit sell order which will be executed when the price in the market reaches their sell limit order price. This is indicated as from the chart below;

The above is a price analysis of TRX in terms of USDT. Three points are being indicated. There is point A ,point B and point C. Point A is the Aroon down while point B is the Aroon up. On the other hand,point C is the overbought crossover point. At point C,the Aroon up has crossed  Aroon down at above 50 thus an indication of an overbought market condition over that point.This signals the cryptocurrency trader to sell a given amount of TRX which he/she had previously purchased with their USDT balance. The cryptocurrency trader can either use a market sell order which will be executed when the order is being placed or they can use the limit sell order which will be executed when the price in the market reaches a limit sell order .When the order is being processed,the account of the cryptocurrency trader will be seen to have increased in value as compared to when they made their buy order.

### Cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.

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