aroon indicator

8/13/2019 Aroon Indicator

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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 youto anticipate changes in security prices fro trending to trading range. !or oreinfor ation on the Aroon indicator see the article written by Tushar Chande in theSepte ber "##$ issue of Technical Analysis of Stocks and Co odities.

These changes are anticipated by easuring the nu ber of periods that have passedsince the ost recent %&period high and %&period low. Therefore' the Aroon indicatorconsists 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 ostrecent %&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 / "--( whenthe security akes a new " &day low' the Aroon ,own / "--. 0hen the security hasnot ade a new high for " days' the Aroon ,own / -( when the security has notade a new low for " days' the Aroon ,own / -.

The age&old proble for any trading syste s is their inability to deter ine if atrending or trading range arket is at hand. Trend&following indicators such asMACD and moving averages ' tend to be whipsawed as arkets enter a non&trendingcongestion phase. 1n the other hand' overbought2oversold oscillators )which workwell during trading range arkets+ tend to overreact to price pull&backs during

trending arkets3thereby closing a position pre aturely. The Aroon indicatoratte pts to re edy this by helping you deter ine when trend&following oroverbought2oversold 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



The Aroon up:

100 * ( 14 - ( ( If(Ref(H ,-1) = HHV(H ,14 ) ,1 ,If(Ref(H ,-2 ) = HHV(H ,14 ) ,2 ,If(Ref(H ,- 3 ) =HHV(H ,14 ) ,3, If(Ref(H ,-4 ) = HHV(H ,14 ) ,4 ,If(Ref(H ,-5 ) = HHV(H ,14 ) ,5 ,If(Ref(H ,-6 ) =HHV(H ,14 ) ,6 ,If(Ref(H,-7 ) = HHV(H ,14 ) ,7 ,If(Ref(H ,-8 ) = HHV(H ,14) ,8 , If(Ref(H ,-9 ) =HHV(H ,14) ,9 ,If(Ref(H ,-10 ) = HHV(H ,14 ) ,10 ,If(Ref(H ,-11 ) = HHV(H ,14) ,11 ,If(Ref(H ,-12 ) = HHV(H ,14) ,12 ,If(Ref(H ,-13) = HHV(H ,14 ) ,13 ,If(Ref(H ,-14 ) = HHV(H ,14 ) ,14 ,0 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) / 14

The Aroon Oscillator = Aroon up & Aroon down.

77 The *8 and ,109 Aroon indicators are to be plotted in the sa e inner&window.

Interpretation:

There are basically three conditions that you look for when interpreting the Aroonindicator6 e%tre es at - and "--' parallel ove ent between Aroon *p and Aroon,own' and crossovers between Aroon *p and Aroon ,own.

Extremes. 0hen the Aroon *p line reaches "--' strength is indicated. If the Aroon*p re ains persistently between :- and "-- a new uptrend is indicated. ;ikewise ifthe Aroon ,own line reaches -' potential weakness is indicated. If the Aroon ,ownre ains persistently between - and <- a new downtrend is indicated. A stronguptrend is indicated when the Aroon *p line persistently re ains between :- and "--while the Aroon ,own line persistently re ains between - and <-. ;ikewise a strongdowntrend is indicated when the Aroon ,own line persistently re ains between :-and "-- while the Aroon *p line persistently re ains between - and <-.

arallel Movement. 0hen the Aroon *p and Aroon ,own ;ines ove parallel witheach other )are roughly at the sa e level+' then consolidation is indicated. =%pectfurther consolidation until a directional ove is indicated by an e%tre e level or acrossover.

Crossovers. 0hen the Aroon ,own line crosses above the Aroon *p line' potentialweakness is indicated. =%pect prices to begin trending lower. 0hen the Aroon *p

line crosses above the Aroon ,own line' potential strength is indicated. =%pect pricesto begin trending higher.



Προσέγγιση 2

Formula

$high:=high;$HH:=$high !e"i# e%&' i +14 ;

$'"##% .:=100*(14-((if($high ef#"e+1 =$HH;1;if($high ef#"e+2 =$HH;2;if($high ef#"e+3 =$HH;3;if($high ef#"e+4 =$HH;4;if($high ef#"e+5 =$HH;5;

if($high ef#"e+6 =$HH;6;if($high ef#"e+7 =$HH;7;



if($high ef#"e+8 =$HH;8;if($high ef#"e+9 =$HH;9;if($high ef#"e+10 =$HH;10;if($high ef#"e+11 =$HH;11;if($high ef#"e+12 =$HH;12;

if($high ef#"e+13 =$HH;13;if($high ef#"e+14 =$HH;14;0)))))))))))))))))/14;

$L# :=L# ;$LL:=$L# !e"i# e%&i%i +14 ;$'"##% # %:=100*(14-((if($L# ef#"e+1 =$LL;1;if($L# ef#"e+2 =$LL;2;if($L# ef#"e+3 =$LL;3;if($L# ef#"e+4 =$LL;4;if($L# ef#"e+5 =$LL;5;if($L# ef#"e+6 =$LL;6;if($L# ef#"e+7 =$LL;7;if($L# ef#"e+8 =$LL;8;if($L# ef#"e+9 =$LL;9;if($L# ef#"e+10 =$LL;10;if($L# ef#"e+11 =$LL;11;if($L# ef#"e+12 =$LL;12;if($L# ef#"e+13 =$LL;13;if($L# ef#"e+14 =$LL;14;0)))))))))))))))))/14;

$'"##% . Li%e & i+$'"##% # %Li%e ' e + R . ; R # %



!"#$%&&'$( ):

Aroon,eveloped by Tushar Chande in "##$' the Aroon is an indicator syste that can beused to deter ine whether a stock is trending or not and how strong the trend is.>Aroon> eans >,awn?s =arly ;ight> in Sanskrit and Chande choose that na e forthis indicator since it is designed to reveal the beginning of a new trend.The Aroon indicator consists of two lines' Aroon)up+ and Aroon)down+. The Aroon1scillator is a single line that is defined as the difference between Aroon)up+ andAroon)down+. All three take a single para eter which is the nu ber of ti e periodsto use in the calculation. Since Aroon)up+ and Aroon)down+ both oscillate between -and @"--' the Aroon 1scillator ranges fro &"-- to @"-- with ero serving as thecrossover line.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. 0hen the stock is settingnew highs for the ti e period' Aroon)up+ will be "--. If the stock has oved lowerevery day during the ti e period' Aroon)up+ will be ero. Aroon)down+ is calculatedin Bust the opposite anner' looking for new lows instead of new highs.

Technically' the *ormula *or Aroon )up+ is )D of periods+ & )D of periods sincehighest close during that ti e+ E 2 )D of periods+ % "--.The *ormula *or Aroon )down+ is )D of periods+ & )D of periods since lowest closeduring that ti e+ E 2 )D of periods+ % "--.!or e%a ple' consider plotting a "-&period Aroon)up+ line on a daily chart. If thehighest closing price for the past ten days occured 5 days ago ) days since the start of

the ti e period+' Aroon)up+ for today would be eFual to ))"-&5+2"-+ % "-- / -. If thelowest close in that sa e period happened yesterday )i.e. on day #+' Aroon)down+ fortoday would be #-.

+nterpretation ,uidelines: Chande states that when Aroon)up+ and Aroon)down+ areoving lower in close pro%i ity' it signals a consolidation phase is under way and nostrong trend is evident. 0hen Aroon)up+ dips below $-' it indicates that the currenttrend has lost its upwards o entu . Si ilarly' when Aroon)down+ dips below $-'the current downtrend has lost its o entu . Galues above :- indicate a strong trendin the sa e direction as the Aroon )up or down+ is under way. Galues below <-indicate that a strong trend in the opposite direction is underway.

The Aroon 1scillator signals an upward trend is underway when it is above ero and adownward trend is underway when it falls below ero. The farther away the oscillatoris fro the ero line' the stronger the trend.

aroon indicator

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