Aroon Indicator

#trendstrength #trendfollowing 

Inventor: Tushar Chande 

Measures how recently the market made its highest high and lowest low. Aroon Up counts bars since the highest high of the period, Aroon Down counts bars since the lowest low. Both move between 0 and 100. Fresh highs push Aroon Up toward 100; fresh lows push Aroon Down toward 100. 

Default period: 25 

Aroon Up near 100 indicates new highs are recent, uptrend. Aroon Down near 100 indicates new lows are recent, downtrend. 

Useful readings: 

Aroon Up above 70 and Aroon Down below 30: Strong uptrend 

Aroon Down above 70 and Aroon Up below 30: Strong downtrend 

Both lines below 50: No fresh highs or lows, sideways market 

Aroon Up crosses above Aroon Down: Buyers taking charge 

Aroon Down crosses above Aroon Up: Sellers taking charge 

Both lines moving together near middle: Consolidation, wait for separation 

Objective rules: 

Bullish: Aroon Up crosses above Aroon Down. 

Bearish: Aroon Down crosses above Aroon Up. 

Strong bullish setup: Aroon Up above 70 AND Aroon Down below 30 

Strong bearish setup: Aroon Down above 70 AND Aroon Up below 30 

Sideways filter: Skip signals while both lines are below 50 

What makes it unique: 

It measures trend by counting time since the last extreme, not price distance – a completely different lens from every other trend tool. Fresh highs or lows literally reset its clock.

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.