Aroon Indicator Technical Analysis & Aroon Indicator Signals

Created and Developed by Tushar Chande

This stock indicator is used to determine if a financial instrument is trending or not.

It is also used to reflect how strong the market trend is.

It is also used to identify the beginning of a market trend, thus its name, which means morning or dawn.

This stock indicator has 2 lines:

Aroon UP
Aroon DOWN

Aroon UP

Percentage of time between the start of a time period and the highest point that stock price has reached during that period.

If stock price sets a new high, Aroon UP will be 100 - for each new high it will stay at 100. However, if stock price moves down by a certain percentage, then that percentage is subtracted from the 100 & Aroon UP starts to move down. This means that if Aroon UP stays at 100 then price is making new highs but when it begins to move down then price isn't making new highs.

If however stock price is making new lows for a particular stock price period then Aroon UP will be at zero

Aroon Up- Indicator - Aroon Indicator Analysis in Charts

Calculation

Aroon UP is a percentage of time between price period & highest point.

If you use Ten price periods for the calculation:

Example 1: Highest stock price was 1 day ago

Then if the highest point was yesterday, i.e. 1 day before then

10 price periods minus 1 day= 9

9/10 in % terms = 90

Aroon UP will be at 90

Example 2: Highest stock price was 5 days ago

If the highest point was 5 days ago then

10 price periods minus 5 = 5

5/10 in % = 50

Aroon UP will be at 50

Aroon DOWN

This is calculated the same way as Aroon UP but this time using the lowest point instead of the highest point.

When a new low is set Aroon DOWN is at 100 & when a new high is set it will move to zero.

Aroon Down- Indicator - Aroon Indicator Analysis in Trade Charts

Technical Analysis & Generating Signals

This stock indicator uses the 50% level to measure momentum of the trend.

Buy Trading Signal & exit signal

Aroon UP above 50 is a buy signal

Aroon UP dipping below 50 level is an exit trading signal if you had opened a buy trade.

Sell Signal & exit signal

Aroon DOWN below 50 is a trading sell signal.

Aroon DOWN moving above 50 level is an exit trading signal if you had opened a sell indices trade.

Aroon Indicator - Aroon Indicator Analysis in Charts - Aroon Indicator MetaTrader 4 Explained

Buy & Sell Trading Signals

Study More Lessons and Topics: