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The Aroon Indicator is a system which can be used to determine whether a stock is trending or not and how strong the trend is. It takes one input: the calculation period and consists of two lines, Aroon Up and Aroon Down. Both Aroon Up and Aroon Down oscillate between 0 and +100. Trends (or lack thereof) are determined by examining extreme values of the two lines, parallel movement, and crossovers. Strength of an equity is indicated when the Aroon Up is at 100, an uptrend is indicated when Aroon Up is between 70 and 100, a downtrend is evident with Aroon Down between 30 and 0 and weakness is indicated with Aroon Down at 0.
If both Aroon Up and Aroon Down remain at extreme levels, a stronger trend is indicated. A strong uptrend is indicated when the Aroon Up is between 70 and 100 while the Aroon Down is between 0 and 30. At the other hand, a strong downtrend is indicated when the Aroon Down is between 70 and 100 while the Aroon Up is between 0 and 30.
Parallel motion of the Aroon Up and Down lines indicates consolidation.
When the Aroon Up line crosses above the Aroon Down line, strength is indicated and, conversely, when the Aroon Down line crosses above the Aroon Up line, weakness is indicated.
