The Aroon indicator is used to define price is following a trend or sideways. And to measure the trend’s strength. If the currency’s trading price is going up. The end for this period will be closer, and on the contrary. The Aroon indicator shows in percents how much time passed between the up (highest) and down (lowest) close starting from the beginning of a period.
- Aroon Up crosses Aroon Down upwards — bullish signal.
- Down Aroon crosses Aroon Up downwards — bearish signal.
- Aroon Up and Aroon Down move in parallel lines — consolidation period.
- The Aroon indicator scale ranges from 0 to 100
- There are 4 important levels to monitor when trading with Aroon indicator: 0, 30, 70 and 100.
Aroon Up rules:
- When Aroon Up reaches the 100 level the uptrend is clearly strong. The closer it remains to the top the stronger the uptrend.
- The Aroon Up line fluctuates between 70 and 100 levels it suggests a Potential uptrend. The signal becomes stronger if at the same time AroonDown remains between 0 and 30 levels.
- If Aroon Up line fluctuates between 0 and 30 levels it suggests trend weakness and a possibility of a trend reversal.
- Aroon Down reaches the 100 level it suggests downtrend being strong. The closer it remains to the top the stronger the downtrend.
- If Aroon Down line fluctuates between 70 and 100 levels it advices on a Potential downtrend. The signal becomes stronger if at the same time AroonUp fluctuates between 0 and 30 levels.
- When Aroon Down fluctuates between 0 and 30 levels it suggests trend weakness and possible future trend reversal.