G. William % R and Aroon Index

" Failure is only the ability to begin again, only this time more wisely "

1. William % R

William % R was developed by Larry Williams that is used to measure the overbought and oversold areas. In william %R, the movement of the price at the -30 until 0 will be overbought area and -70 until -100 will be the oversold area.

Each price is a consensus of value among traders. The recent high range shows the bulls or buyers maximum power. The low of the recent range reflects the maximum power of the bears during that trading range. The most important consensus is as always the closing price Williams %R compares each closing price to the recent range indicating whether bulls can close the price near the top of the range, or bears can close the market at the bottom of the price. Price may be pushed higher or lower during the day but the Williams %R will indicate which group is actually capable of closing the market.

If bulls cannot close the market near the top of a rally they are weaker than they seem and this creates a shorting opportunity. If bears cannot close the market near the lows during a decline then they are weaker than they appear and this creates a buying opportunity. It is important to remember that overbought does not necessarily imply time to sell, and oversold does not necessarily imply time to buy. A security can be in a downtrend, become oversold and remain oversold as the price continues to trend lower. Once a security becomes overbought or oversold, traders should wait for a signal that a price reversal has occurred.

As always, price reversal confirmation can also be accomplished by using other indicators or aspects of technical analysis with Williams %R. One method of using Williams %R might be to identify the underlying trend and then look for trading opportunities in the direction of the trend. In an uptrend, traders may look to oversold readings to establish long positions. In a downtrend, traders may look to overbought readings to establish short positions.

2. Arron Index

Aroon index was developed by Tushar Chande at 1995, aroon index is the indicator that is used to measure the prices are in the strong trend or weakness trend besides that it can be used to know the price in the consolidation trend or not.


Aroon index cases :

• If Upper Aroon and Lower Aroon are moving lower in are close by to each other, it means that no strong trend is apparent.
• If upper Aroon slightly goes below 50, it is an indication that the current uptrend has lost its momentum. Vice versa in case of Lower Aroon.
• If value in case of either Aroon is above 70 then it indicates strong trend, direction depends on which Aroon is above 70. If Upper then uptrend, if lower then downtrend.
• If value in case of either Aroon is below 30, it is an indication that strong trend in the opposite direction is coming. So sign of possible reversal.