Aroon Indicator

What Is the Aroon Indicator?

Developed by Tushar Chande in 1995, the Aroon indicator determines whether a trend is forming, how strong it is, and whether a reversal might be starting. Aroon Up measures how many periods have passed since the highest high within the lookback window (default 25). Aroon Down measures periods since the lowest low. Both are expressed on a 0-100 scale: 100 means the high (or low) occurred on the most recent bar; 0 means it occurred 25 bars ago.

Reading Aroon Signals

When Aroon Up is above 70 and Aroon Down is below 30, a strong uptrend is in place. The reverse indicates a strong downtrend. Crossovers between the two lines signal potential trend changes: Aroon Up crossing above Aroon Down suggests the beginning of an uptrend. When both lines are below 50, the market is consolidating with no clear trend. The Aroon Oscillator (Aroon Up minus Aroon Down) simplifies interpretation: positive values are bullish, negative bearish.

Aroon Trading Strategy

A straightforward approach: enter long when Aroon Up crosses above 70 and Aroon Down falls below 30. Exit when Aroon Up drops below 50 or when a crossover occurs. This system catches emerging trends early. The 25-period default works well on daily charts. For intraday trading on 1-hour charts, try 14 periods. Aroon pairs well with Average Directional Index: use ADX to confirm trend strength and Aroon to identify the trend's direction and freshness.