Aroon Indicator Analysis and Aroon Gold Indicator Signals

Developed by Tushar Chande

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

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

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

This gold indicator has two lines:

• Aroon UP Indicator
• Aroon DOWN Indicator

Aroon UP Indicator

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

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

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

Calculation

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

If you use 10 trading 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 Indicator will be at 90

Example 2: Highest price was 5 days ago

If the highest point was 5 days ago then

10 trading price periods minus 5 = 5

5/10 in percent = 50

Aroon UP Indicator will be at 50

Aroon DOWN Indicator

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

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

Trading Analysis & Generating Trading Signals

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

Buy Gold Signal and exit signal

Aroon UP Indicator above 50 is a technical buy signal

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

Sell Gold Signal and exit signal

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

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

Buy and Sell Trading Signals