Aroon Oscillator formula

Aroon-Up/Down - Aroon Oscillator formula

On the well-known technical analyst Tushar Chande Aroon-Up/Down goes back to the indicator. It is in principle a classic trending indicator that would enable the user is able to detect incipient trends and trend changes as early as possible. Different approach to the strong trend of trend-free phases absolutely has its place as classic trend-following approaches reveal trendless phases as major weaknesses as countertrend strategies in a strong market trend phases.

Basis of considerations of T. Chande is the definition of a trend over the sequence of rising high and rising lows in an uptrend, and similarly the concatenation of falling and falling high-lows in a downtrend. Specifically, this is the number since the last since the distinctive high or low point last trading periods measured, the indicator signals so - so at least the theory - a "breakout". The restriction is made to during the last years of the observed increased Volailität markets with frequent switching between trend and trend-less periods, which make the period for taking advantage of "Breakout" is always lower.

Aroon-Up/Down is - as the name suggests - consists of two lines, the Up and Down the Line. "Aroon up" is determined by the ratio of the number of days since the last high point and the base value used in period length, "Aroon down" analogy. This is followed by a multiplication by 100, which causes the indicator value is always between 0 and 100 percent moves.

How to understand can be achieved, "Aroon up" 100% if the underlying is a new period of high (greater than or equal to) is recorded, "Aroon down" achieved consistent 100% if the underlying is a new period low (less than or equal to) achieve is. While trend-less periods both indicator lines tend towards zero. Of particular importance is the choice of the individual period length, which represent the periods 10-30 rule. The sake of clarity, the indicator still gets two extreme zones in the range 70 to 80 percent and donated 20 to 30 percent.


The two extreme zones imply in itself already the interpretation of the whole. Based on trendless phases in the central area there is an uptrend when the "Up" bigger "Down" and "Up" is above the upper extreme zone. Analog is still a downward trend, if "down" greater than "Up" and "Down" is over the 70/80-Prozent-Marke. Possible change in trend can be identified by a crossing of the two indicator lines where "herald" the junction towards the base value is. Of importance also the center line, a downward tick indicates the end of an existing trend.

The main drawback of the approach is demonstrated that price changes have no impact on the progress indicator, as only time changes are measured. Aroon-Up/Down is therefore limited as a trend filter pronounced trend during periods without frequent adjustments.

A slight variation - but not really new information - it is the Aroon Oscillator. The calculation is simple, it is merely the subtraction of "Aroon down" from "Aroon up". Unlike the mother indicator that is only one line is present indicator values ​​indicate an upward trend over the center line, is at the center line of a downtrend to go. As a signal for change, the trend is seen crossing the midline, depending on the oscillator away from the midline, the more pronounced is the current trend.