Aroon indicator

Introduced by Tushar Chande, the Aroon indicator measures elapsed time rather than price distance, which is what separates it from almost every other indicator. Aroon Up counts how many periods have passed since the highest high inside the lookback window, expresses that as a proportion of the window and inverts it, so a reading near one hundred means the highest high is recent and a reading near nought means it sits at the far edge of the window. Aroon Down does the same for the lowest low.

The conventional readings follow from that construction. Both lines near the top of their range describes a window in which the extremes keep being renewed. Aroon Up sitting persistently above Aroon Down describes a series making new highs more recently than new lows. The difference between the two lines is sometimes plotted on its own as an oscillator around nought. These are descriptions of what the calculation reports, and the thresholds attached to them are conventions, not findings.

Two properties trip readers up. Because it measures time, a very large move that fails to set a new extreme leaves both lines exactly where they were, so the indicator can be flat through a session that dominated the chart. And because it counts whole periods, it moves in discrete steps rather than smoothly, which makes crossovers look sharper than the underlying change in the market.