Aroon Indicator: Aroon Up, Aroon Down and the Oscillator

What the Aroon indicator measures

The Aroon indicator asks how recently a stock set its highest high and its lowest low within a lookback window. Tushar Chande introduced it in 1995 and named it after the Sanskrit word for the first light of dawn, because it was meant to show when a new trend is starting. Unlike most oscillators, it uses the timing of extremes rather than the size of price changes.

Both of its lines run from 0 to 100. A reading of 100 means the extreme occurred in the latest session; 0 means it occurred at the oldest session of the window. Values change in steps, because the count of sessions is a whole number.

Aroon Up and Aroon Down explained

Aroon Up tracks the most recent highest high and Aroon Down the most recent lowest low. Each line drops by 100 / n for every session its extreme ages and jumps back to 100 when a new extreme is set. The two lines are read together, because each describes only one side of the range.

Aroon Up = ((n - sessions since the highest high) / n) × 100
Aroon Down = ((n - sessions since the lowest low) / n) × 100

This guide uses two conventions that platforms do not all share. The window holds n + 1 sessions, so the count runs from 0 to n and the lines can reach both 0 and 100. When the same high or low appears more than once in the window, the count starts from its most recent occurrence.

Aroon indicator calculation, step by step

The hypothetical stock below declines into session 8 and then turns higher. The example uses n = 10 to keep the table short; with 25 the steps are the same and each session of age is worth 4 points instead of 10. The first value needs 11 sessions, so it appears at session 11.

Session 14 shows the tie rule: its high of $26.00 equals the high of session 12. Counting from the most recent occurrence gives 0 sessions and an Aroon Up of 100; counting from the earlier one would give 2 sessions and 80.

Aroon oscillator calculation

The Aroon Oscillator subtracts Aroon Down from Aroon Up, compressing the two lines into one that runs from -100 to +100. Positive values mean the latest high is more recent than the latest low; negative values mean the reverse. In the example it moves from -70 at session 11 to +80 at session 16.

Aroon Oscillator = Aroon Up - Aroon Down

The single line is easier to scan, but it hides information. A reading near 0 can come from both lines near 100, a widening range that keeps setting new highs and new lows, or from both lines near 0, a quiet range that has set neither for a long time. Check the two lines before reading the oscillator.

Aroon crossover example

A crossover happens when Aroon Up moves above Aroon Down, or the reverse. In the table, Aroon Up is 0 and Aroon Down 70 at session 11. At session 12 a new 10-session high lifts Aroon Up to 100, while Aroon Down, still counting from the low of session 8, slips to 60: an upward crossover, and the oscillator turns positive in the same session.

A crossover only says that the more recent extreme has switched from a low to a high, or back. It does not measure how far price moved, and in a narrow range the lines can cross back and forth as small new highs and lows alternate.

Trend and consolidation readings

Chart readers usually sort Aroon readings into a few states. The thresholds below are common conventions, not measured cutoffs, and the states describe the recent past rather than what comes next.

• Aroon Up above 70 and Aroon Down below 30: new highs are recent and new lows are old, a pattern consistent with an uptrend.
• Aroon Down above 70 and Aroon Up below 30: the mirror image, consistent with a downtrend.
• Both lines below 50, or falling together: no recent new high or new low, which often accompanies a consolidation.
• Both lines high: new highs and new lows in quick succession, a widening range.

The illustration in this guide shows the phases with a 25-session lookback: Aroon Down holds near 100 during the decline and sinks through the sideways range while Aroon Up stays low, so both lines sit low before the advance, when Aroon Up takes over.

How to read the Aroon indicator on a stock chart

Plot the two lines in a pane below price over the same dates. Start with the steps: each session without a new extreme moves a line down by 100 / n, so a steady slide means the extreme is aging, while a jump to 100 marks the session that set a new one. Then find those sessions on the price chart and see how far price actually moved.

Because Aroon ignores the size of moves, pair it with a measure of distance or volatility, such as the percentage from the recent high or the average true range, before calling a trend strong.

Limitations of the Aroon indicator

Aroon is simple to compute, and that simplicity is also its main weakness. It reduces a window of prices to two ages.

• It ignores magnitude: a new high by one cent counts the same as a breakout of several percent.
• Values depend on n and on the conventions for ties and window size, so two platforms can show different readings for the same stock.
• Range-bound markets produce frequent crossovers as small extremes alternate.
• A single outlier bar, such as a gap session, can hold an extreme in the window until it ages out.
• It looks backward: the lines describe when extremes happened, not what happens next.

Data cadence and where to study it

Aroon works on any bar size. On daily bars, n counts sessions and each value updates after the close; on weekly bars, the same n spans five times as much calendar time. TradeClever’s Stock Charts do not plot Aroon, but their daily candles let you locate the sessions that set recent highs and lows, and the guide to stocks near highs and lows covers measuring distance from those extremes.