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Aroon Indicator

Overview The Aroon indicator was developed by Tushar Chande. Aroon is Sanskrit word “dawn’s early light” or the change fro night to day. The Aroon indicator allows you to anticipate changes in security prices fro trending to trading range. !or ore infor ation on the Aroon indicator see the article written by Tushar Chande in the Septe ber "##$ issue of Technical Analysis of Stocks and Co odities. These changes are anticipated by easuring the nu ber of periods that have passed since the ost recent %&period high and %&period low. Therefore' the Aroon indicator consists of two plots( one easuring the nu ber of periods since the ost recent %& period high )Aroon *p+ and the other easuring the nu ber of periods since the ost recent %&period low )Aroon ,own+. The actual plotted value is a “stochastic” like scale )see Stochastic Oscillator+ ranging fro - to "--. Assu ing a default ti e& period of ". days' if a security akes a new ".&day high' the Aroon *p / "--( when the security akes a new ".&day low' the Aroon ,own / "--. 0hen the security has not ade a new high for ". days' the Aroon ,own / -( when the security has not ade a new low for ". days' the Aroon ,own / -. The age&old proble for any trading syste s is their inability to deter ine if a trending or trading range arket is at hand. Trend&following indicators such as MACD and moving averages' tend to be whipsawed as arkets enter a non&trending congestion phase. 1n the other hand' overbought2oversold oscillators )which work well during trading range arkets+ tend to overreact to price pull&backs during trending arkets3thereby closing a position pre aturely. The Aroon indicator atte pts to re edy this by helping you deter ine when trend&following or overbought2oversold indicators are likely to succeed. Aroon Indicator is one of the new indicators of 4etastock 5.- or later versions .The !or ula of Aroon Indicator consists of several co ple% for ulas as follows 6 Formula The Aroon down:
100* (14 - (( If(Ref(L,-1) = LLV( L ,14 ) ,1 , If( Ref(L ,-2 ) = LLV( L,14 ) ,2 , If( Ref(L ,- 3 ) = LLV( L,14 ) ,3 ,If( Ref(L ,-4 ) = LLV( L ,14 ) ,4 ,If(Ref( L ,-5 ) = LLV( L ,14 ) ,5 ,If(Ref(L ,-6 ) = LLV( L,14 ) ,6 ,If( Ref(L ,-7 ) = LLV( L,14 ) ,7 ,If(Ref( L ,-8 ) = LLV( L ,14 ) ,8 ,If(Ref( L ,-9 ) = LLV( L,14 ) ,9 ,If( Ref(L,-10) = LLV(L,14 ) ,10 ,If(Ref(L ,-11) = LLV( L,14 ) ,11 ,If(Ref(L,-12) = LLV(L ,14) ,12,If( Ref(L,-13) = LLV(L ,14 ) ,13 ,If( Ref( L,-14) = LLV( L,14 ) ,14 ,0) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) / 14

=%pect prices to begin trending higher.4 . Extremes.If(Ref(H .ikewise a strong downtrend is indicated when the Aroon .14 ) .while the Aroon *p line persistently re ains between .If(Ref(H .1 .If(Ref(H . . A strong uptrend is indicated when the Aroon *p line persistently re ains between :. If(Ref(H .14) .6 .If(Ref(H . =%pect prices to begin trending lower. If the Aroon *p re ains persistently between :.-8 ) = HHV(H .10 .3 ) = HHV(H .-4 ) = HHV(H . .a new uptrend is indicated.and "-while the Aroon .ines ove parallel with each other )are roughly at the sa e level+' then consolidation is indicated. 0hen the Aroon . Interpretation: There are basically three conditions that you look for when interpreting the Aroon indicator6 e%tre es at . 0hen the Aroon *p and Aroon . 0hen the Aroon *p line reaches "--' strength is indicated.-14 ) = HHV(H .own line reaches -' potential weakness is indicated.own line' potential strength is indicated.14 ) . If the Aroon .14 ) .-13) = HHV(H .14) . Crossovers. .The Aroon up: 100 * ( 14 .own line persistently re ains between .11 .-1) = HHV(H .-2 ) = HHV(H . If(Ref(H .12 .13 .2 .If(Ref(H.If(Ref(H .and "-.14 ) . =%pect further consolidation until a directional ove is indicated by an e%tre e level or a crossover.109 Aroon indicators are to be plotted in the sa e inner&window.If(Ref(H .and <-.own re ains persistently between .-5 ) = HHV(H . 0hen the Aroon *p line crosses above the Aroon .3.9 .( ( If(Ref(H .-10 ) = HHV(H .own line persistently re ains between :and "-.If(Ref(H .own' and crossovers between Aroon *p and Aroon .If(Ref(H .-6 ) = HHV(H .14 ) .8 .and <-.14 ) .ikewise if the Aroon .and <.own .14 ) .7 .14 ) .14) .own..14 ) .-9 ) = HHV(H .own line crosses above the Aroon *p line' potential weakness is indicated. arallel Movement.-11 ) = HHV(H .14 . 77 The *8 and .If(Ref(H .12 ) = HHV(H .14 ) .and "--' parallel ove ent between Aroon *p and Aroon .5 .If(Ref(H .-7 ) = HHV(H . 0 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) / 14 The Aroon Oscillator = Aroon up & Aroon down.a new downtrend is indicated.14) .

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4. $'"##%-*.7. if($high /ef#"e+7. if($high /ef#"e+3.1.=$HH.=$HH.=$HH.2. if($high /ef#"e+6. . $HH:=$high !e"i#$e%&'(i)*)+14. if($high /ef#"e+2.=$HH.3. if($high /ef#"e+4.Προσέγγιση 2 Formula $high:=high.6.=$HH..=$HH. if($high /ef#"e+5.5.=$HH.:=100*(14-((if($high /ef#"e+1.

=$LL.7. if($high /ef#"e+13.10. $L#0:=L#0.=$LL. if($L#0 /ef#"e+5. if($L#0 /ef#"e+12.12.=$LL. if($L#0 /ef#"e+14.14.=$HH.=$LL.=$HH.14.12.=$HH.=$LL. if($L#0 /ef#"e+2.11. if($L#0 /ef#"e+4.=$LL.=$HH.=$HH.5.=$LL. if($high /ef#"e+9.6.0)))))))))))))))))/14. if($L#0 /ef#"e+7.9.2.=$LL.=$HH.. $LL:=$L#0 !e"i#$e%&i%i)*)+14. Li%e1&*23i+$'"##%-$#0%.8.=$LL.4.=$LL.13.10. if($high /ef#"e+11. $'"##%-*. Li%e4')e1+56R774-*.1.13.=$LL. . if($L#0 /ef#"e+3. if($L#0 /ef#"e+11. if($L#0 /ef#"e+6. if($high /ef#"e+10. if($high /ef#"e+14.8.=$LL. if($L#0 /ef#"e+9.5.56R774-$#0%5.=$LL. if($L#0 /ef#"e+10.9.11. if($high /ef#"e+12. if($L#0 /ef#"e+13.if($high /ef#"e+8. if($L#0 /ef#"e+8.0)))))))))))))))))/14.=$LL.3.=$HH. $'"##%-$#0%:=100*(14-((if($L#0 /ef#"e+1.

The Aroon indicator consists of two lines' Aroon)up+ and Aroon)down+. Si ilarly' when Aroon)down+ dips below $-' the current downtrend has lost its o entu .indicate a strong trend in the sa e direction as the Aroon )up or down+ is under way. 0hen Aroon)up+ dips below $-' it indicates that the current trend has lost its upwards o entu .with Aero serving as the crossover line. Galues below <indicate that a strong trend in the opposite direction is underway.to @"-. All three take a single para eter which is the nu ber of ti e periods to use in the calculation. If the highest closing price for the past ten days occured 5 days ago ). The farther away the oscillator is fro the Aero line' the stronger the trend. >Aroon> eans >.awn?s =arly .e. If the stock has oved lower every day during the ti e period' Aroon)up+ will be Aero. The Aroon 1scillator is a single line that is defined as the difference between Aroon)up+ and Aroon)down+.-.eveloped by Tushar Chande in "##$' the Aroon is an indicator syste that can be used to deter ine whether a stock is trending or not and how strong the trend is. ./ . Technically' the *ormula *or Aroon)up+ is C )D of periods+ & )D of periods since highest close during that ti e+ E 2 )D of periods+ % "--. Since Aroon)up+ and Aroon)down+ both oscillate between and @"--' the Aroon 1scillator ranges fro &"-. If the lowest close in that sa e period happened yesterday )i. days since the start of the ti e period+' Aroon)up+ for today would be eFual to ))"-&5+2"-+ % "-. 0hen the stock is setting new highs for the ti e period' Aroon)up+ will be "--. The *ormula *or Aroon)down+ is C )D of periods+ & )D of periods since lowest close during that ti e+ E 2 )D of periods+ % "--. !or e%a ple' consider plotting a "-&period Aroon)up+ line on a daily chart. on day #+' Aroon)down+ for today would be #-.uidelines: Chande states that when Aroon)up+ and Aroon)down+ are oving lower in close pro%i ity' it signals a consolidation phase is under way and no strong trend is evident. Galues above :.!"#$%&&'$( ): Aroon . +nterpretation . Aroon)down+ is calculated in Bust the opposite anner' looking for new lows instead of new highs.ight> in Sanskrit and Chande choose that na e for this indicator since it is designed to reveal the beginning of a new trend. Aroon)up+ for a given ti e period is calculated by deter ining how uch ti e )on a percentage basis+ elapsed between the start of the ti e period and the point at which the highest closing price during that ti e period occurred. The Aroon 1scillator signals an upward trend is underway when it is above Aero and a downward trend is underway when it falls below Aero.