Aroon Indicator is a chart underlay indicator used by traders /investors to identify the trends and also their strengths.
Introduction:
Aroon Indicator is a useful tool for traders and investors who want to identify trends and their strengths. It’s available under indicators on charting tools like TradingView, and it has two parts:
AroonUp and AroonDown.
Both AroonUp and AroonDown range between 0 and 100 and values are calculated using the below formulas for an n-day period.
Image: Aroon Indicator applied onto TradingView chart!
Both AroonUp and AroonDown range between 0 and 100 and values are calculated using the below formulas for an n-day period.
Aroon-Up = [(n-Days – Periods Since the Highest High within Period Specified) / n-Days] x 100
Aroon-Down = [(n-Days – Periods Since the Lowest Low for Period Specified) / n-Days] x 100
How do traders interpret Aroon Indicator lines on the price chart?
When applied to the price chart, Aroon Indicator represents a range-bound trend for a given period. A strong trend is indicated when Aroon line is close to or around 100, while a weaker trend is indicated when it’s close to or around 0. If it’s close to or around 50, then it’s a ranging trend.
How to look for trends & signals using Aroon Indicator on charts?
Image:Aroon Crossover
To look for trends and signals using Aroon Indicator on charts, traders usually look for new trends if Aroon Up/Down lines cross each other. For example, if Aroon-Up crosses above and the Aroon-Down cross each other and continue in opposite directions with one line going above 50 and the other line below 50, then upward-moving, traders usually expect a new trend to begin.
Table showing Aroon lines Vs Up/ Downtrend :
| Trend Vs Aroon Lines | Aroonup | Aroondown |
| Uptrend | >50 and close to 100 | < 50 |
| Downtrend | < 50 | > 50 and close to 100 |
Practice Aroon Indicator – Beginner
Practice Aroon Indicator – Intermediate
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