Aroon Up Down

The Aroon Up and Aroon Down indicators are technical analysis tools used to measure the strength and direction of a trend. They were developed by Tushar Chande in 1995.

The Aroon Up indicator measures the number of periods since the highest high within a given time frame. It ranges between 0 and 100, where 100 indicates that the current period’s high is the highest within the specified time frame. A reading of 0 means that the current period’s high is the lowest within the time frame.

The formula to calculate the Aroon Up is as follows:

Aroon Up = ((Number of periods – Number of periods since the highest high) / Number of periods) x 100

On the other hand, the Aroon Down indicator measures the number of periods since the lowest low within the same time frame. It also ranges between 0 and 100, where 100 indicates that the current period’s low is the lowest within the specified time frame. A reading of 0 means that the current period’s low is the highest within the time frame.

The formula to calculate the Aroon Down is as follows:

Aroon Down = ((Number of periods – Number of periods since the lowest low) / Number of periods) x 100

The Aroon Up and Aroon Down indicators are often plotted together on a chart, with the Aroon Up line represented by a green line and the Aroon Down line represented by a red line. Traders look for crossovers and divergences between these two lines to identify potential trend changes and trading opportunities.

When the Aroon Up line crosses above the Aroon Down line, it is considered a bullish signal, indicating that the current trend may be shifting to an uptrend. Conversely, when the Aroon Down line crosses above the Aroon Up line, it is considered a bearish signal, indicating that the current trend may be shifting to a downtrend.

The Aroon Up/Down indicators can also be used in conjunction with the Aroon Oscillator, which is calculated by subtracting the Aroon Down value from the Aroon Up value. The Aroon Oscillator fluctuates between -100 and +100, with positive values indicating an uptrend and negative values indicating a downtrend.

Overall, the Aroon Up and Aroon Down indicators provide valuable insights into the strength and direction of a trend, helping traders make more informed trading decisions.