92 AAron indicator

By looking at the time between highs and the time between lows over a time period, the Aaroon indicator help to reveal the change as well as the strength of a trend.

The Arron indicator is composed of two lines. An up line measures the number of periods since a High, and a down line which measures the number of periods since a Low.

The equations are:

Figure 11.1: AAron indicator

The indicator focuses on the last 25 periods, but is scaled to zero and 100. Say Aaron Up yielded a value of 50, this means the price made a new high within the last 12.5 periods. A reading near 100 means a high was seen very recently. The same concepts apply to the Down Aroon.

The important aspect of Aaron the the comparison between the two lines. When the two Aaron lines crossover it indicates a reversal. When both indicators are below 50 it can signal that the price is consolidating.

Figure 11.2: AAron indicator