Spotting Consolidations With the Aroon Indicator

Spotting Consolidations With the Aroon Indicator Image
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The Aroon indicator measures trends, but can also be used to spot consolidations. When both Aroon levels are low (below 30 in this case) it means that the stock has not made a new short term high or low in a while. Therefor it is trading in a price range and it could be an interesting trade when it breaks out of this range.


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Understanding the Aroon Indicator

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The Aroon Screening Capabilities and How To Use this Indicator in a Trading Strategy

In this follow-up article I will elaborate on the screening possibilities in the ChartMill platform. Furthermore I will use an example setup to describe how this indicator can make a practical contribution in a trading strategy.

Stock Screener Settings

Average Volume: 50 SMA > 300K

Minimal liquidity

Aroon: Aroon down Below 30

Low Aroon indicator levels

Price: Above 20

To avoid low priced stocks

Volatility: ATR(20)% Above 1

Minimum volatility to avoid dead stocks

Aroon: Aroon up Below 30

Low Aroon indicator levels

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Chart Settings

Aroon indicator

Regional Run

Run this screen in your favorite region. You can always further fine tune the screen by changing the general settings after it opened in the screener.