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Aroon Indicator Forex Technical Analysis and Aroon Indicator Forex Trading Signals

Developed by Tushar Chande

 

This indicator is used to determine if a trading instrument is trending or not.

 

It is also used to indicate how strong the trend is.

 

It is also used to identify the beginning of a trend, the name its name which means morning or dawn.

 

This indicator has two lines:

  • Aroon UP
  • Aroon DOWN

 

Aroon UP

Percentage of time between the start of a time period and the highest point that price has reached during that period.

 

If price sets a new high, Aroon UP will be 100 - for each new high it will stay at 100. However, if price moves down by a certain percentage, then that percentage is subtracted from the 100 and Aroon UP starts to move down. This means that if Aroon UP stays at 100 then price is making new highs but when it starts to move down then price is not making new highs.

 

If however price is making new lows for a particular price period then Aroon UP will be at zero

Aroon Up- Technical Indicator

 

 

Calculation

Aroon UP is a percentage of time between price period and highest point.

 

If you use 10 price periods for calculation:

 

Example 1: Highest price was 1 day ago

Then if the highest point was yesterday, i.e 1 day before then

10 price periods minus 1 day= 9

9/10 in percent terms = 90

Aroon UP will be at 90

 

Example 2: Highest price was 5 days ago

If the highest point was 5 days ago then

10 price periods minus 5 = 5

5/10 in percent = 50

Aroon UP will be at 50

 

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Aroon DOWN

This is calculated the same as Aroon UP but this time using the lowest point instead of the highest point.

 

When a new low is set Aroon DOWN is at 100 and when a new high is set it will move to zero.

 

Aroon Down- Technical Indicator

 


Forex Technical Analysis and Generating Forex Trading Signals

 

This indicator uses the 50 % level to measure momentum of the trend.

 

Buy Signal and exit signal

Aroon UP above 50 is a technical buy signal

 

Aroon UP dipping below 50 is an exit signal if you had bought the currency.

 

Sell Signal and exit signal

Aroon DOWN below 50 is a technical sell signal.

 

Aroon DOWN rising above 50 is an exit signal if you had sold the currency.

 

Technical Analysis of Aroon Indicator- Buy Sell Signal

Buy and Sell Signals

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