While “Aroon up” and “Aroon down” are changing simultaneously, the trend isn’t clear. The price then moves sideways, or is going to move sideways. When “the Aroon up” is under 50, it’s a signal that the uptrend is giving up its momentum. And when “the Aroon down” is under 50; it’s a signal that the downtrend is giving up its momentum. When “the Aroon up” or “Aroon down” exceed 70, it’s a signal of a strong trend in the same direction. And when the value is under 30, it shows a moving in the contrary direction. In the end, the positive value of the Aroon Oscillator demonstrates the coming trend (or an upward trend) and the negative value demonstrates a downward trend. The indication of a trend gets stronger if the absolute value goes higher.
Application Of Aroon Indicator(Stock Market)
When Aroon(up) and Aroon(down) are moving together, there is no clear trend (the price is moving sideways, or about to move sideways).
When the Aroon(up) is below 50, it is an indication that the uptrend is losing its momentum, while when the Aroon(down) is below 50, it is an indication that the downtrend is losing its momentum.
When the Aroon(up) or Aroon(down) are above 70, it indicate a strong trend in the same direction, while when the value is below 30, it indicates a trend coming in an opposite direction.
Finally, for the Aroon Oscillator, the positive value indicates an upward trend (or coming trend), and the negative value indicates a downward trend. The higher the absolute value of an oscillator, the stronger is an indication of a trend.
When the Aroon Up line reaches 100 it is a sign of strength. If the Aroon Up persists between 70 and 100, a new uptrend is indicated. Likewise if the Aroon Down line falls to 100, potential weakness is indicated. If the Aroon Down remains persistently between 70 and 100, a new downtrend is indicated. A strong uptrend is indicated when the Aroon Up line persistently remains between 70 and 100 while the Aroon Down line persistently remains between 0 and 30. Likewise a strong downtrend is indicated when the Aroon Down line persistently remains between 70 and 100 while the Aroon Up line persistently remains between 0 and 30.
When the Aroon Down line rises above the Aroon Up line, potential weakness is indicated and expect prices to begin trending lower. When the Aroon Up line crosses the Aroon Down line, potential strength is indicated and prices should begin to trend higher.
When the Aroon Up and Aroon Down Lines move parallel with each other then consolidation is indicated. Expect further consolidation until a directional move is indicated either by an extreme level or a crossover.