Let's learn a little about the technical functionality of the Aroon indicator
The Aroon indicator gives the impression of being very complicated and its usefulness seems to be meaningless, however, the statistical configuration of the Aroon indicator allows you to anticipate changes in price action, trend direction, trading range, change and strength of the trend, elements that in my opinion make it a vital tool that should be included in our trading strategies.
According to my technical understanding when the Aroon-Up line is above the Aroon-Down line it is an uptrend, and when the Aroon-Down line moves above the Aroon-Up line it is a downtrend.
Consequently, the technical information provided by the Aroon indicator is that when the ascending line or Aroon-Up (green line on the chart) crosses the descending line or Aroon-Down (red line on the chart) and touches 100, this can be interpreted as an indication of an uptrend, and in the case that the Aroon-Down line is close to zero (0) both readings confirm a strong uptrend.
In relation to downtrend interpretations, when the descending line or Aroon-Down (red line on the chart) crosses the ascending line or Aroon-Up (green line on the chart) and touches 100, this can be interpreted as an indication of a downtrend, and in the case that the Aroon-Up line is close to zero (0) both readings confirm a strong downtrend.
Another important projection revealed by the Aroon indicator is that if the Aroon-Up and Aroon-Down lines separate, i.e. if they are distant from each other, it is an indication that the trend is strong, therefore, you can choose to enter or exit the market in the reversals or rebounds of the price action.
In the next post I will share another interesting technical applicability of the Aroon indicator. Thanks for visiting my blog.
SOURCES CONSULTED
AvaTrade Aroon Indicator Trading Strategies. Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: TradingView
Hi @lupafilotaxia a good explanation about Aaron, I recently got a video about him. While typical momentum indicators focus on price action relative to time, Aroon focuses on time relative to price.
The Aroon indicator can be used to identify emerging trends, identify periods of consolidation and/or correction as well as to anticipate trend changes.