Description

• Founded by Tushar Chande in 1995, Aroon indicator is used to identify emergence of a new trend
• It is formed of two lines, Aroon Up and Aroon Down which oscillates between 0 and 100 levels
• Aroon up measures the number of bars passed since x-period highest price and Aroon down measures number of bars passed since x-period lowest price

Interpretation

• Crossover between Aroon up & down is an indication of reversal for buy & sell
• Opposite extremes between Aroon Up & down. E.g. – if Aroon Up is at 80 and Aroon down is at 20, indicates strong Uptrend
• When Aroon Up & Down move parallel to each other, it indicates consolidation

Default Parameters Used/Inputs

• High Line
• Low Line
• Bars

Returns/Output

Aroon Index values of stock for the specified period

Formula

Aroon Up = [(n – Period Bar since Highest High)/N] * 100
Aroon Down = [(n – Period Bar since Lowest Low)/N] * 100