The Aroon indicator is a technical trending indicator used to measure the significance of a security’s upward or downward moving trend. Created in 1995 by Tushar Chande, the Aroon indicator is similar in function to the directional movement index (DMI) and used by many traders to predict when a new trend is beginning to form.
The Fundamentals of the Aroon Indicator
The Aroon indicator is comprised of two lines:
The "Aroon up" line
The solid blue Aroon up line measures the amount of time the highest price was maintained during a specified time period.
The "Aroon down" line
The dotted red Aroon down line measures the amount of time the lowest price was maintained during that same period.
The Aroon indicator records the duration of time it takes for the price to reach its highest and lowest points over a set period of time. The values represented by both Aroon indicator lines fluctuate between zero and 100, with strong trends recording values nearer to 100 and weak trends at or near the zero value. When the Aroon up line has a lower value, it is a clear signal that the uptrend is weak and the downtrend is strong and vice versa.
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