The Aroon Up/Down technical indicator identifies when the price is in a trend or trading sideways.
It was developed by Tushar Chande, who used the word “aroon” due to its meaning in Sanskrit: “dawn’s early light” or “the change from night to morning”.
The indicator uses two lines: Aroon Up and Aroon Down.
- Aroon Down is a measure of how close the current bar is to the most recent lowest Low bar found in the last N bars.
- Aroon Up is a measure of how close the current bar is to the most recent highest High bar found in the last N bars.
The Aroon Up/Down indicator ranges from 0 to 100.
The default period is 14 days.
How to Use Aroon Up/Down
- If the price makes a new 14-day high, the Aroon Up = 100.
- If the price makes a new 14-day low, the Aroon Down = 100.
- If the price does not make a new high in 14 days, the Aroon Up = 0
- If the price does not make a new low for 14 days, the Aroon Down = 0.
Similar to the ADZ indicator, the Aroon indicator is used to determine if the market is trending or not.