Aroon Commodities Indicator Technical Analysis & Aroon Commodity Trading Indicator Signals

Developed by Tushar Chande

This commodity technical indicator is used to determine if a instrument is trending or not.

It is also used to indicate how strong the commodity trend is.

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

This commodity technical indicator has two lines:

• Aroon UP
• Aroon DOWN

Aroon UP

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

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

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

Calculation

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

If you use 10 commodity price periods for calculation:

Example 1: Highest commodity price was 1 day ago

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

10 commodity price periods minus 1 day= 9

9/10 in percent terms = 90

Aroon UP will be at 90

Example 2: Highest commodity price was 5 days ago

If the highest point was 5 days ago then

10 commodity price periods minus 5 = 5

5/10 in percent = 50

Aroon UP will be at 50

Aroon DOWN

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

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

Commodities Trading Analysis & Generating Trading Signals

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

Buy Commodity Signal & exit signal

Aroon UP above 50 is a technical buy signal

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

Sell Commodity Signal & exit signal

Aroon DOWN below 50 is a technical sell commodity trade signal.

Aroon DOWN rising above 50 is an exit signal if you had opened a sell commodity trade.

Buy & Sell Trading Signals