Trade Forex Trading

Aroon Analysis & Aroon Indicator Signals

Built and Made by Tushar Chande

This indicator is used to figure out if a financial and trading instrument is trending or not.

It's also used to indicate how strong the trend is.

It's also utilized to signal the beginning of a trend, its name meaning dawn or morning.

This indicator has two lines:

  • Aroon UP
  • Aroon DOWN

Aroon UP

This measures the percent of time from a period's start to the top price it hits in that span.

If the price establishes a new peak, the Aroon UP indicator will register at 100 and will remain there for every subsequent new high reached. Conversely, should the price decline by a specified percentage, that percentage is deducted from the 100 mark, causing Aroon UP to descend. This transition indicates that when Aroon UP stays at 100, the price is consistently making new highs: its downward movement signals that new highs are no longer being achieved.

If, alternatively, the price is consistently establishing lower lows over a specific period, the Aroon UP reading will register at zero.

Aroon Up Indicator Analysis - Aroon Technical Analysis in Forex Charts - Aroon Analysis

Calculation

Aroon Up measures the time from the period's start to its high.

Using ten price periods for the calculation:

Example 1: Peak Price Hit One Day Back

And if the highest price was reached yesterday, - one day prior

The price bar time is nine, which is one day less than.

9/10 in % terms = 90

Aroon UP will be at 90

Example 2: Highest price was five days ago

If the peak occurred 5 days ago then

10 price periods subtract 5 equals 5

5/10 in percentage = 50

Aroon UP will be at 50

Aroon DOWN

This calculation method mirrors that of Aroon UP, but it specifically uses the lowest recorded point rather than the highest.

When a new low happens, Aroon DOWN is at 100: when a new high happens, it goes to zero.

Aroon Down Technical Analysis Examples Explained - Aroon Analysis in Forex Charts

Technical Analysis and How to Generate Trading Signals

This indicator checks market momentum at the 50% level.

Buy Trading Signal and exit Signal

Aroon UP above 50 is a technical buy trade signal

Aroon UP falling below 50 serves as a selling signal if you bought the currency.

Sell Signal & exit Signal

Aroon Down Under 50 Signals a Sell Trade.

Aroon DOWN moving above 50 is an exit trading signal if you had sold the currency.

Aroon Buy & Sell Signal Indicator - Aroon Analysis in Forex Charts

Aroon Analysis - Aroon Buy & Sell Signal Indicator

More Lessons:

Forex Broker