This is simply a forex trend indicator that helps Forex traders identify the market trends. It shows if the market has a specific direction or is stagnant or range-bound. Unlike many other forex indicators, this indicator indicates both the downward and upward trends strengths of each loaded chart. This may not seem very clear, but that is not the case. The trader can make more precise and accurate decisions by providing the two trend strengths.
This indicator displays a red and aqua color line on a chart below the main trading. The aqua color line shows an uptrend, while the red line shows a downtrend. The indicator indicates the strength of the forex market price trend by the line, which is above the other. The line on top of the other shows that that market trend is dominant over the other. If the red color line crosses the aqua line and gets above, there is a downtrend in the market. The same applies if the aqua color line gets above the red line.
Fig.1. The Aroon Up Down indicator is loaded on a EURUSD chart.
This forex indicator chart (chart below the main mt4 trading chart) has a vertical scale from 4.5 1o 100.
There are several things that a new forex trader should take heed of when using this forex indicator. These things include:
- The forex trader should trade when this forex indicator is at the extremes. A strong uptrend is signaled by the up line getting to between 70 and 100 in the vertical scale of the indicator.
- The trader should avoid trading when the indicator shows that the market has no trend. This is indicated by the forex indicator’s lines moving parallel to each other than crossing each other.
- The trading signal is when the lines cross over each other. This is the best time to place orders. But if the trader is too late and finds that the line crossed each other a long time ago, he should wait for a crossing.
How to place trades using the Aroon Up Down indicator
- Placing buys:
The forex trader should place a buy order when the aqua line crosses over the red line. This is when the aqua-colored line gets above the red line. This mainly happens when the lines have risen to almost 100 levels as per the scalp of the indicators chart. Therefore, a trader should note that when the line is between 10 and 100 levels, there is an expected crossing for placing a buy order.
- Placing sells:
The trader should place a sell order when the red line crosses the aqua line. This is when the red-colored line gets above the aqua line. This mainly happens when the lines have dropped to almost 0 levels as per the scalp of the indicators chart. Therefore, a trader should note that when the line is between 10 and 4.5 levels, there is an expected crossing for placing a buy order.
Example of opening order using the Aroon Up Down indicator.
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Aroon Up Down Forex Indicator Free Download