Trend & directionAroon · Aroon
Tushar Chande's pair of lines timing how recently price set a new high or low within the lookback.
Works in most conditionsEngine-computed on a fixed sample series
What it is
The Aroon indicator, created by Tushar Chande in 1995, times trends by measuring how recently price set a new high or a new low within a lookback window. The name comes from a Sanskrit word for the dawn's early light, reflecting Chande's intent to catch a new trend at its very beginning. It answers a specific question that most trend tools miss: not how far price has moved, but how long it has been since the last extreme, which turns out to be an early tell for the birth of a trend. It consists of two lines — Aroon Up and Aroon Down — each ranging from 0 to 100, and reading their interplay reveals whether an uptrend, a downtrend, or a range is in control.
How it's calculated
Over a chosen lookback (25 periods is standard), Aroon Up is calculated as ((lookback − periods since the highest high) / lookback) × 100, and Aroon Down uses the same formula with the periods since the lowest low. If the highest high in the window occurred on the current bar, no periods have passed, so Aroon Up equals 100; if that high was set at the very start of the window, Aroon Up decays toward 0. Aroon Down works identically for the lowest low. Because the calculation keys entirely on the recency of the extreme, not its magnitude, a fresh high pins Aroon Up at 100 regardless of how large the move was. Both lines are bounded between 0 and 100 and update every bar as the window slides.
Reading it, step by step
Aroon Up near 100 with Aroon Down near 0 means highs are being made very recently while lows are stale — a strong, fresh uptrend; the reverse configuration marks a strong downtrend. When the two lines cross, control is changing hands: Aroon Up crossing above Aroon Down signals the emergence of upside leadership, and the opposite cross signals downside leadership. When both lines are low (below 50) and tangled, neither new highs nor new lows are being made, which describes a consolidation or range with no trend. Readings that hold near 100 on one line indicate a persistent, healthy trend, while a line falling from 100 warns that new extremes have stopped coming. The tool is thus read as a timing and regime gauge rather than a magnitude gauge.
Best timeframes and settings
The default lookback of 25 periods is Chande's standard and works well on daily charts for swing trading; it can be shortened for faster, more sensitive signals or lengthened for slower, more reliable ones. On intraday charts a 25-bar Aroon catches shorter trends, while position traders may lengthen it on weekly charts. A shorter lookback makes the lines jump to 100 and 0 more readily, catching trends earlier but flipping more often on minor probes; a longer lookback demands a more established extreme and produces steadier but later signals. Because Aroon reacts to single new extremes, the lookback directly controls how twitchy it is. Most traders leave it at 25 and adjust the timeframe instead when they want a different sensitivity.
When and where to use it
Aroon is especially good at catching the emergence of a new trend from a quiet base, so it is most valuable at the transition from range to trend. It works on any liquid instrument and in any market that alternates between consolidation and directional moves. Use it to identify when a range is resolving into a trend and to gauge the freshness and health of an existing trend by whether the leading line stays near 100. It is less useful in a tight, persistent range, where both lines stay low and cross repeatedly on meaningless probes of the range edges. Because it measures recency of extremes rather than momentum, avoid reading it as a strength meter; pair it with a magnitude tool when that matters.
Strategies that use it
A trend-emergence strategy buys when Aroon Up crosses above Aroon Down and rises toward 100 while Aroon Down falls toward 0, entering on the confirmation that fresh highs are dominating; the short mirror uses the opposite cross. A consolidation-avoidance strategy treats both lines below 50 as a no-trade zone and stands aside until one line breaks decisively above the other and toward 100. A strong-trend strategy holds a position as long as the leading line stays pinned near 100 and only exits when it falls away and the lines converge, using that convergence as the sign the trend is stalling. Across these, the crossover and the proximity to 100 or 0 supply the signals, and the low-and-tangled state supplies the filter.
Combining it with other indicators
Aroon lives in the same family as Wilder's Directional Movement, and pairing it with ADX is natural: Aroon times the trend's start while ADX confirms the trend's strength, so an Aroon Up cross backed by a rising ADX above 25 is a robust combination. Because Aroon ignores magnitude, a momentum tool like the MACD or RSI complements it by measuring the force of the move it flags. The Vortex Indicator, another directional tool, cross-validates Aroon's read on which side is in control. A volume indicator can confirm that a fresh high driving Aroon Up to 100 came with participation. Support-and-resistance context helps distinguish a genuine breakout high, which Aroon rewards, from a marginal probe that will fail.
Where it fails
Because Aroon keys on new extremes, it can flip early and misleadingly on a single probe of a high or low — one marginal new high pins Aroon Up at 100 even if price immediately reverses. In a tight range the two lines cross back and forth repeatedly as price pokes each edge, producing a stream of false signals. Aroon measures only the recency of extremes, not the size of the move, so a trivial new high and a powerful one look identical to it, which can overstate a weak trend. The lag is modest but present, since it still requires an extreme to register. The defenses are to require the leading line to hold near 100 rather than acting on the first touch, to filter with a trend-strength tool like ADX, and to ignore crossovers while both lines sit low in a range.
A worked example
Consider a stock that has traded sideways between $50 and $54 for a month, with both Aroon Up and Aroon Down oscillating below 50 as price pokes each edge — the tool's signal to stay out. Then price breaks above $54 to a genuine new high on the 25-day window; Aroon Up jumps to 100 while Aroon Down, whose last low is now weeks old, decays toward 20. Aroon Up crossing decisively above Aroon Down and pinning at 100 signals a fresh uptrend, and the trader goes long near $54.50. Over the next several weeks Aroon Up stays near 100 as the stock makes successive new highs to $62, keeping the trader in the trade. Only when price stalls and Aroon Up finally falls away from 100 toward Aroon Down does the trader exit, having used the dawn of the new trend — exactly what Chande designed the tool to catch — as the entry.