Aroon
Trend
Aroon (Sanskrit for 'the first light of dawn') measures how long ago the highest and the lowest price of the period were set. It is a time indicator, not a price indicator.
Construction & calculation
- Look over the last 14 bars: how many bars ago was the highest price? And the lowest?
- Aroon Up = 100 x (14 - number of bars since the highest price) / 14.
- Aroon Down = 100 x (14 - number of bars since the lowest price) / 14.
- Both lines move between 0 and 100. The Aroon oscillator is the difference (Up - Down).
Aroon Up = 100 x (n - bars since highest) / n
Aroon Down = 100 x (n - bars since lowest) / n with n = 14
Interpretation
- Aroon Up at 100 = today is the highest price of the period: strong upward trend.
- Both lines low and tangled = no new extremes, the market is consolidating.
- Aroon Up above 70 with Aroon Down below 30 confirms a healthy uptrend (and vice versa).
How the signal works in this scanner
Buy signal (green)Aroon Up crosses the Aroon Down from below to above.
Sell signal (red)Aroon Down crosses the Aroon Up from below to above.
Watch-outs & pitfalls
- The indicator is sensitive to the chosen period. At 14 bars it reacts nimbly, but in a choppy market the lines cross back and forth quickly.
- Aroon says nothing about the size of the move, only about the timing of the extremes.