Aroon

Description:

Measures the time since the last highest and lowest prices, indicating if a stock is trending or in a range-bound state.  The Aroon indicator consists of two lines.  The Aroon Up is measured as the number of periods since a new high.  The Aroon Low is measured as the number of periods since a new low.

Input Parameters:

• Length: Number of periods used in the calculation.

Use Cases:

1. Identify Trend Reversals: When the Aroon Up is above the Aroon Down this is a sign up bullish price action.  When the Aroon Down is above the Aroon Up this can be a sign of bearish price action.   Identifying when the two lines cross can indicate a trend reversal.
2. Identify Trend Strength: If either line is close to 100, then this means that the trend is very strong.  While values close to 0 indicate a weaker trend.  When both values are below 50, this can indicate that price is consolidating.

Do you want to learn more? Check out our Learning Center Article.

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