The Aroon Indicator is designed to identify the direction and strength of existing trends by examining the time elapsed since the highest and lowest prices were reached over a set period. It consists of two separate lines: Aroon Up and Aroon Down.
Aroon Up Plot: Represents the strength and duration of an upward trend.
Aroon Down Plot: Depicts the strength and duration of a downward trend.
Overbought Level: Indicates a potential area where the asset might be considered overbought.
Oversold Level: Highlights a zone where the asset could be perceived as oversold.
Parameters:
Length: Default set at 25 periods for identifying the highs and lows. Adjusting this parameter changes the timeframe over which the highest and lowest prices are considered.
Overbought: Threshold set at 70. Modifying this alters the level which indicates an overbought condition.
Oversold: Threshold set at 30. Modifying this alters the level which indicates an oversold condition.
Aroon Indicator subgraph on chart
*Please note that these observations are for informational purposes and should not be construed as financial advice.