Aroon Indicator Technical Analysis & Aroon Technical Indicator Signals

Developed by Tushar Chandes

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

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

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

This 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 price has reached during that period.

If crude trading price sets a new high, Aroon UP will be 100 - for each new high it will stay at 100. However, if crude trading 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 crude trading price is making new highs but when it starts to move down then price is not making new highs.

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

Calculation

Aroon UP is a percentage of time between crude trading price period & highest point.

If you use 10 crude 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 crude trading price periods minus 1 day= 9

9/10 in percent terms = 90

Aroon UP will be at 90

Example 2: Highest crude trading price was 5 days ago

If the highest point was 5 days ago then

10 crude 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 highest point.

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

Technical Analysis & How to Generate Signals

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

Buy Oil Signal and exit signal

Aroon UP above 50 is a technical buy crude trade signal

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

Sell Oil 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 opened a sell crude oil trade.

Buy & Sell Signals