Aroon v13 IDE

The Aroon indicator is a technical analysis tool, developed by Tushar Chande in 1995, that measures a trend's strength and potential reversals using two lines, Aroon Up and Aroon Down. Aroon Up tracks the number of periods since the highest price, and Aroon Down tracks the number of periods since the lowest price. Traders use its signals, such as crossovers and values above 80 or below 20, to identify emerging trends, confirm momentum, and anticipate market turns. How the Aroon Indicator Works

• Components: The indicator consists of two lines, Aroon Up and Aroon Down, which measure time relative to price. 
• Aroon Up: Measures the time (in periods) since the most recent high within a defined lookback period. 
• Aroon Down: Measures the time (in periods) since the most recent low within the same lookback period. 
• Formula:
• Aroon Up = [(Number of periods since the highest high) / (Total periods)] × 100 
• Aroon Down = [(Number of periods since the lowest low) / (Total periods)] × 100 
• Settings: A common setting for the lookback period is 14 days. 

How to Interpret Aroon Indicator Signals

• Trend Identification:
• Aroon Up above 50 and Aroon Down below 50: signals an uptrend and a higher likelihood of new highs. 
• Aroon Down above 50 and Aroon Up below 50: suggests a downtrend with a higher probability of new lows. 
• Trend Strength:
• Values close to 100: for either line indicate a strong trend, as the price is consistently making new highs (Aroon Up) or lows (Aroon Down). 
• Values close to 0: suggest a lack of recent highs or lows, indicating a weak trend or sideways market. 
• Trend Reversals:
• A crossover where Aroon Up moves above Aroon Down suggests the potential start of an uptrend, while the opposite crossover suggests a potential downtrend. 
• An extreme value: for either indicator (e.g., above 80 or below 20) can signal the potential end of a corrective move and the beginning of a new trend.