The Aroon Indicator is the sixth (6) in the SWING•GENIE suite of indicators.
The Aroon indicator is used to identify trend changes in the price of an asset, as well as the strength of that trend. The indicator measures the time between highs and the time between lows over a time period of your selection. The idea is that strong uptrends will regularly see new highs, and strong downtrends will regularly see new lows. The indicator signals when this is happening. You can adjust the time frame between the new highs or new lows in the setting/input panel.
New historical highs are often a very strong indications of strong momentum in an equity. Because a large number of individual are looking for this as an indication of a good entry point, it often become a spring board for a new trend.
Aroon is also an excellent tool to screen stocks with to look for the emergence of a new trends.
The Aroon indicator was orginally developed by Tushar Chande.
THE SWING•GENIE AROON INDICATOR
AROON LEVEL INDICATIONS
The SWING•GENIE AROON indicator was developed to provide strong color bands at each of the levels that are indicated a key levels by the developers of the indicator. It also allows you to see at a glance if the trend is up or down by just looking at the color of line on top. Green and the trend is up, red and the trend is down.
The Arron indicator is composed of two lines. An Up line which measures the number of periods since a High, and a Down line which measures the number of periods since a Low.
Crossovers of the two lines (AROON UP and AROON DOWN) can signal trend reversals.
NEW UP TREND DEVELOPING
• Surge to 100 by Aroon Up and decreasing value in Aroon Down.
NEW DOWN TREND DEVELOPING
• Surge to 100 by Aroon Down and decreasing value in Aroon Up.
STRONG TREND DEVELOPING, STRENGTHNING OR CONTINUNING
• Aroon Up above 70 indicates a strong up-trend.
• When the Aroon Up is above the Aroon Down, it indicates bullish price behavior.
• Aroon Down above 70 indicates a strond down-trend
• When the Aroon Down is above the Aroon Up, it signals bearish price behavior.
STRONG TREND WEAKNING
• Aroon Up below 50 warns that the up-trend is weakening.
• Aroon Down below 50 signals that the down-trend is weakening.