Momentum indicator

Aroon indicator: Aroon Up, Aroon Down and how to trade them

The Aroon indicator has two lines from 0 to 100: Aroon Up shows how recently price made its highest high in the last 25 candles, and Aroon Down how recently it made its lowest low. A reading of 100 means it happened on this candle. Aroon Up above 70 with Aroon Down below 30 signals a strong uptrend, and Aroon Up crossing above Aroon Down signals a new one taking over.

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What it isHow to trade itWhat proves it wrong
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What it is

Tushar Chande introduced Aroon in 1995; the name means 'dawn's early light' in Sanskrit. Rather than measuring how far price has moved, it measures time: how many candles since the last new high and the last new low. Fresh highs mean an uptrend is alive; old highs mean it is ageing.

This makes it good at telling trends from ranges. In a range both lines drift down together because no new extremes are being made.

How it is calculated

1. Look back over the last 25 candles (plus the current one). 2. Count the candles since the highest high. Aroon Up = 100 x (25 minus that count) / 25. 3. Count the candles since the lowest low. Aroon Down = 100 x (25 minus that count) / 25. 4. A new high on the current candle makes Aroon Up 100; a high 25 candles ago makes it 0.

Settings

SettingDefaultRangeWhat it changes
Length252 to 200How many candles to look back for the highest high and lowest low. Shorter catches new trends sooner but whipsaws more.

How to read it

Aroon Up at 100Price has just made a new 25 candle high.
Aroon Up above 70, Down below 30A strong uptrend: new highs are recent and new lows are old.
Aroon Down above 70, Up below 30A strong downtrend.
Aroon Up crosses above Aroon DownHighs have become more recent than lows. A new uptrend may be starting.
Both lines below 50 and fallingNo fresh highs or lows: the market is ranging or consolidating.

How to trade it

  1. 1

    On a 1 hour US30 chart, wait for Aroon Up to cross above Aroon Down.

  2. 2

    Require Aroon Up to reach 70 or more, showing new highs are actually being made.

  3. 3

    Enter on the next pullback, or on a close above the candle that pushed Aroon Up to 100.

  4. 4

    Stop below the most recent swing low, for example 80 to 120 points on 1 hour US30.

  5. 5

    Exit when Aroon Up falls below 50 or Aroon Down crosses above it, or at 2 times the stop.

What proves it wrong

The uptrend idea is wrong if Aroon Down crosses back above Aroon Up, or if price closes below the swing low that started the move.

How WickSpeak reads Aroon

WickSpeak draws Aroon Up and Aroon Down in their own pane and writes a plain-English reading on the live candle: what they measure, whether the market is trending or ranging right now, how to trade it and what would prove it wrong. In Playbook, a condition can check when Aroon Up crosses above or below Aroon Down, or Aroon Up sits above or below Aroon Down.

Best markets and timeframes

Works on any market. On gold and indices, 1 hour and 4 hour charts give the clearest trend reads. On short charts the lines flip often during the quiet Asian session.

Common mistakes

  • Trading every crossover, including those where neither line reaches 70.
  • Forgetting it measures time, not distance. A new high by 1 point still scores 100.
  • Using it alone in a range, where both lines drift and cross repeatedly.

Works well with

Questions traders ask

What is the best setting for Aroon?

The standard setting is 25 periods. Some intraday traders use 14 for faster signals. Longer settings give fewer, more reliable trend reads.

What does Aroon Up at 100 mean?

It means the current candle made the highest high of the look-back window. It shows a fresh high, not the size of the move.

How do you trade the Aroon crossover?

Buy when Aroon Up crosses above Aroon Down and reaches 70, with a stop below the last swing low. Sell when the opposite happens. Crosses where both lines stay low are weak.

What is the difference between Aroon and ADX?

Both show trend strength. ADX measures how far price is moving in one direction, while Aroon measures how recently new highs or lows were made. Aroon often reacts sooner to a fresh breakout.

Read Aroon on a live chart

WickSpeak writes what Aroon is doing on every candle, how to trade it and what proves it wrong. Free for 30 minutes, no account.