Description
Tushar Chande published his AROON indicator in his first book "The New Technical Trader" in 1994. Since the AROON is a trend-predicting indicator, it is very well suited for diagnosing trend phases and trend changes.

Calculation
The AROON measures the number of days which have passed since the last high or low. Whilst the AROON Up consider the rising prices, the AROON Down measures the falling prices.

Formula Parameters
The adjustable period length can be chosen from 1 to 500. The most common settings will have a period length ranging from 8 to 30.

Interpretation
An upward trend is shown with an AROON Up and a downward trend with an AROON Down of over 70.
During an upward trend, the AROON Up lies above the AROON Down, whereas during the downward trend it is the other way around.
As soon as there is a crossover of the AROON lines, there may be a trend change.