Aroon & Chaikin Oscillator

by | Oct 25, 2020

Disclaimer: Posts on the HyperTrader blog and associated HyperLinq websites are for educational and informational purposes only. These posts should not be taken as financial advice, nor are they meant to be viewed as trading advice. HyperLinq Inc. or the authors take no responsibility for any damages or losses.

The crypto markets’ bizarre aspects have made technical analysis and charting invaluable trading tools for crypto traders as they accommodate to predict trend, momentum, and support & resistance. This blog will discuss two advanced popular technical analysis methods, Aroon & Chaikin Oscillator, used to analyze crypto markets like BTC and ETH. 

Aroon Oscillator

Tushar Chande created the Aroon Oscillator in 1995, which is turned out handy for traders in defining the strength of an asset, in this case, being in the crypto market . The Aroon Oscillator is a technical momentum indicator that can be used to determine the direction, the beginning point, and strength of a trend. The Aroon Oscillator operates to measure the length of time as its value registered an x-day low or high.

The reputation of the Aroon Oscillator in the crypto market derives from the fact that the volatility in BTC is immense. Aroon works in several ways when utilized in the BTC market. It is provided with a couple of lines that measure the time among recent lows and highs. For example, a crypto trader uses the Aroon and sets it to 21, which means that Aroon will determine all the lows and highs of the recent 21 bars. When the value appears to reach 21 bar high, the Aroon Upline will go to 100.

On the contrary, when the value reaches the low, the Aroon Down will also go to 100. Commonly, buy signals are usually designated by a crossover of the Aroon Up being over the Aroon Down. A sell signal is identified by a crossover of the Aroon Down being over Aroon Up.

Using the Aroon Oscillator in crypto trading is useful when traders need to recognize trend reversals in the crypto market. The fixed two lines of the indicator work to expose either an upward trend or a downward trend in a particular crypto asset.

Chaikin Oscillator

Aroon & Chaikin Oscillator Indicator on HyperTrader

Mark Chaikin designed the Chaikin oscillator to gauge the momentum of accumulation/distribution line of MACD, which helps crypto traders identify the market’s course. As an oscillator, Chaikin also benefits crypto traders to distinguish whether the market is in an overbought or oversold condition. The accumulation/distribution line plays a keep part associated with the Chaikin; when the line is going up, it indicates that price is on an upward trend and shows that most crypto traders are buying that particular crypto asset. If the line is heading downhill, then the trend is downward. The difference between the price movements and ADL suggests that the current asset trend will change soon and go in the corresponding direction with the indicator. 

Understanding the momentum fluctuations can help a crypto trader predict trend reversals since variations in momentum often introduce changes in trend.

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Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"
Head of Content Marketing @ HyperLinq. His love for Chai and mountains precedes everything. Often wonders about things like, "why $1 earned through leverage feels 100x better than $1 earned selling your time?"

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