Aroon explained: Aroon Up, Aroon Down and the oscillator

What Aroon measures

Look back over the last N bars and find the highest high and the lowest low. Aroon Up scores how recently the high was set: 100 if it is the current bar, falling towards 0 the further back it sits. Aroon Down does the same for the low. In a clean uptrend each new bar tends to set the high, so Aroon Up sits near 100 while Aroon Down drifts down; a downtrend is the reverse.

The Aroon Oscillator is Aroon Up minus Aroon Down, on a scale from −100 to +100. It is positive while the high is the more recent of the two extremes and negative while the low is. Because subtracting keeps the order, "Aroon Up is above Aroon Down" and "the oscillator is above zero" are the same condition, and so are their crossings. That is why SixOne8 offers the oscillator as one line rather than the two lines and a set of crossover comparisons that would say the same thing.

Aroon settings

1. Period. How many bars back the high and the low are looked for — fourteen by default. The window is the current bar plus the previous fourteen, so a period of 14 reads fifteen bars, the convention TA-Lib and TradingView both use. A longer period describes a longer trend and changes value less often.
2. Threshold. The level a "greater than", "less than" or "crosses" comparison reads, from −100 to +100; 50 by default. The zero comparisons need no threshold.

Where two bars share the window's high or low, the more recent one is taken as setting it. On a flat stretch where every bar touches the same high, that keeps the reading at 100 rather than letting it decay as if the high were getting older.

How to use Aroon in a strategy

These are the comparisons SixOne8 offers for the Aroon Oscillator, in the builder's own words.

1. Above zero / below zero. True for every bar the high is the more recent extreme (above) or the low is (below). A state: an alert fires when the strategy first becomes satisfied, not again while it stays that way.
2. Crosses above zero / crosses below zero. True only on the bar the high becomes the more recent extreme, or the low does — the moment Aroon Up and Aroon Down cross.
3. Greater than / less than a level. True while the oscillator is beyond your threshold. Above +50 asks for the high to be clearly the more recent of the two.
4. Crosses above / crosses below a level. True only on the bar the oscillator moves through your threshold.
5. Rising / falling. The oscillator is higher, or lower, than it was the bar before.

Aroon Oscillator(14) on 1h  ·  crosses above zero

Read it as a sentence: on the 1-hour chart, the highest high of the last fifteen bars has just become more recent than the lowest low. That is what the scanner checks at each hourly close, and what the alert will say if this is the condition that completed the strategy.

Why the Aroon line moves in steps

The oscillator can only take values in steps of 100 divided by the period — about 7.1 on the default of 14 — so it holds flat for runs of bars and then jumps. Two things follow. "Rising" is false on most bars, because most bars leave the line where it was. And a threshold that sits between two steps behaves exactly like the step below it: on a period of 14 there is no value of exactly 50, so "crosses above 50" fires on the bar the line steps past it, not when it seems to land there.

The single line also gives something up. Both raw lines low means neither extreme is recent — price drifting inside an old range. Both high means both extremes are very recent — a wide, choppy swing. Both read as an oscillator near zero. If that difference matters to your idea, a second indicator such as ADX describes it better than a threshold on this one.