Aroon Indicator Technical Analysis and Aroon Indicator Forex Trading Signals
Developed by Tushar Chande
This indicator is used to determine if a trading instrument is trending or not.
It is also used to indicate how strong the trend is.
It is also used to identify the beginning of a trend, the name its name which means morning or dawn.
This indicator has two lines:
- Aroon UP
- Aroon DOWN
Percentage of time between the start of a time period and the highest point that price has reached during that period.
If price sets a new high, Aroon UP will be 100 - for each new high it will stay at 100. However, if 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 price is making new highs but when it starts to move down then price is not making new highs.
If however price is making new lows for a particular price period then Aroon UP will be at zero
Aroon UP is a percentage of time between price period and highest point.
If you use 10 price periods for calculation:
Example 1: Highest price was 1 day ago
Then if the highest point was yesterday, i.e. 1 day before then
10 price periods minus 1 day= 9
9/10 in percent terms = 90
Aroon UP will be at 90
Example 2: Highest price was 5 days ago
If the highest point was 5 days ago then
10 price periods minus 5 = 5
5/10 in percent = 50
Aroon UP will be at 50
This is calculated the same as Aroon UP but this time using the 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.
Technical Analysis and Generating Signals
This indicator uses the 50 % level to measure momentum of the trend.
Buy Signal and exit signal
Aroon UP above 50 is a technical buy signal
Aroon UP dipping below 50 is an exit signal if you had bought the currency.
Sell Signal and exit signal
Aroon DOWN below 50 is a technical sell signal.
Aroon DOWN rising above 50 is an exit signal if you had sold the currency.
Aroon Indicator Technical Analysis - Aroon Indicator Buy and Sell Signal Technical Indicator