Aroon: how recently the high and low were made

What it measures

Aroon measures elapsed time, not price. Aroon Up asks how many bars have passed since the highest high of the window; Aroon Down asks the same about the lowest low. Both are expressed as a percentage of the window.

That makes it structurally different from almost every other indicator on a chart. A market can rise slowly and steadily without producing much of a signal on a momentum oscillator, while Aroon Up stays pinned near 100 because new highs keep arriving.

It identifies the beginning of a trend well and says almost nothing about its strength, which is the opposite trade-off from ADX.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Find how many bars ago the highest high of the lookback occurred.

2. 2

   Aroon Up is (period − that count) divided by the period, as a percentage. A new high today gives 100.

3. 3

   Repeat with the lowest low for Aroon Down.

4. 4

   The oscillator is Aroon Up minus Aroon Down, running from −100 to +100.

Settings

Fourteen or twenty-five are both common. The period is the memory: a longer window keeps an old extreme relevant for longer and makes the lines steadier, at the cost of taking longer to acknowledge that a new range has formed.

How to read it

• Aroon Up above 70 with Aroon Down below 30 is an established uptrend by this measure — new highs are recent and new lows are not.
• Both readings low means neither extreme is recent, which is a consolidation the window has outgrown.
• The crossover of the two lines is the standard signal and arrives early, because it only takes one new extreme to move a line to 100.
• A reading can change sharply with no price movement at all, purely because an old extreme dropped out of the window.

Where it misleads

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