Aroon Commodities Indicator Technical Analysis and Aroon Technical Indicator Trading Signals

Developed by Tushar Chande

This commodity indicator is used to determine if a instrument is trending or not.

It is also used to indicate how strong the commodity trend is.

It is also used to identify the starting of a trend, the name its name which means morning or dawn.

This commodity indicator has two lines:

• Aroon UP Indicator
• Aroon DOWN Indicator

Aroon UP Indicator

Percentage of time between the start of a time period and the highest point that commodities trading price has reached during that period.

If commodities trading price sets a new high, Aroon UP Indicator will be 100 - for each new high it will stay at 100. However, if commodities trading price moves down by a certain percentage, then that percentage is subtracted from the 100 and Aroon UP Indicator starts to move down. This means that if Aroon UP Indicator stays at 100 then commodities trading price is making new highs but when it starts to move down then commodities trading price isn't making new highs.

If however commodities trading price is making new lows for a particular commodities trading price period then Aroon UP Indicator will be at zero

Calculation

Aroon UP Indicator is a percentage of time between commodities price period & highest point.

If you use 10 commodities trading price periods for calculation:

Example 1: Highest commodities trading price was 1 day ago

Then if the highest point was yesterday, i.e. 1 day before then

10 commodities price periods minus 1 day= 9

9/10 in percent terms = 90

Aroon UP Technical Indicator will be at 90

Example 2: Highest commodities trading price was 5 days ago

If the highest point was 5 days ago then

10 commodities trading price periods minus 5 = 5

5/10 in percent = 50

Aroon UP Technical Indicator will be at 50

Aroon DOWN Indicator

This is calculated the same as Aroon UP Technical Indicator but this time using the lowest point instead of highest point.

When a new low is set Aroon DOWN Indicator is at 100 & when a new high is set it will move to zero.

Commodity Technical Analysis & How to Generate Trading Signals

This commodity indicator uses the 50% level to measure momentum of the trend.

Buy Commodity Signal & exit signal

Aroon UP Indicator above 50 is a technical buy commodities trade signal

Aroon UP Indicator dipping below 50 is an exit signal if you had opened a buy commodities trade.

Sell Commodity Signal & exit signal

Aroon DOWN Indicator below 50 is a technical sell commodities trade signal.

Aroon DOWN Indicator rising above 50 is an exit signal if you had opened a sell commodities trade.

Buy & Sell Trading Signals