Aroon oxcillator

Aroon
Developed by Tushar Chande in 1995, Aroon is an indicator system that can be used to determine whether a stock is trending or not and how strong the trend is. "Aroon" means "Dawn's Early Light" in Sanskrit and Chande choose that name for this indicator since it is designed to reveal the beginning of a new trend.
The Aroon indicator system consists of two lines, 'Aroon(up)' and 'Aroon(down)'. It takes a single parameter which is the number of time periods to use in the calculation. Aroon(up) is the amount of time (on a percentage basis) that has elapsed between the start of the time period and the point at which the highest price during that time period occurred. If the stock closes at a new high for the given period, Aroon(up) will be +100. For each subsequent period that passes without another new high, Aroon(up) moves down by an amount equal to (1 / # of periods) x 100.

Technically, the formula for Aroon(up) is:

[ [ (# of periods) - (# of periods since highest high during that time) ] / (# of periods) ] x 100
For example, consider plotting a 10-period Aroon(up) line on a daily chart. If the highest price for the past ten days occurred 6 days ago (4 days since the start of the time period), Aroon(up) for today would be equal to ((10-6)/10) x 100 = 40.
Aroon(down) is calculated in just the opposite manner, looking for new lows instead of new highs. When a new low is set, Aroon(down) is equal to +100. For each subsequent period that passes without another new low, Aroon(down) moves down by an amount equal to (1 / # of periods) x 100.

The formula for Aroon(down) is :

[ [ (# of periods) - (# of periods since lowest low during that time) ] / (# of periods) ] x 100
Continuing the example above, if the lowest price in that same ten-day period happened yesterday (i.e. on day 9), Aroon(down) for today would be 90.

Aroon Oscillator

A separate indicator called the Aroon Oscillator can be constructed by subtracting Aroon(down) from Aroon(up). Since Aroon(up) and Aroon(down) oscillate between 0 and +100, the Aroon Oscillator will oscillate between -100 and +100 with zero as the center crossover line.


Interpretation Guidelines


Chande states that when Aroon(up) and Aroon(down) are moving lower in close proximity, it signals that a consolidation phase is under way and no strong trend is evident. When Aroon(up) dips below 50, it indicates that the current trend has lost its upward momentum. Similarly, when Aroon(down) dips below 50, the current downtrend has lost its momentum. Values above 70 indicate a strong trend in the same direction as the Aroon (up or down) is under way.
The Aroon Oscillator signals an upward trend is underway when it is above zero and a downward trend is underway when it falls below zero. The farther away the oscillator is from the zero line, the stronger the trend
In some ways, Aroon is similar to Wilder's DMI system (and the Aroon Oscillator is similar to Wilder's ADX line) however the Aroon is constructed in a completely different manner. Divergences between the two systems may be very instructive.


The AFL Language of AROON will be as following.just copy it to yourformula editor and run.



_SECTION_BEGIN("Aroon Indicators");
//------------------------------------------------------------------------------
//
// Formula Name: Aroon Indicators
// Author/Uploader: Marek Chlopek
// E-mail: mchlopek@post.pl
// Date/Time Added: 2001-12-20 03:36:38
// Origin:
// Keywords: Aroon
// Level: basic
// Flags: indicator
// Formula URL: http://www.amibroker.com/library/formula.php?id=138
// Details URL: http://www.amibroker.com/library/detail.php?id=138
//
//------------------------------------------------------------------------------
//
// A time price oscillator.
//
//------------------------------------------------------------------------------

// AROON.AFL v 0.006 20/12/2001
// Aroon
// Coded by Marek Chlopek, December 2001
// For interpretation of the Aroon indicators refer to Tushar Chande's article
// "Time Price Oscillator" in the Sep, 95 S&C magazine

// Thanks to Mr Dimitris Tsokakis for his suggestions.
// See message tread: http://groups.yahoo.com/group/amibroker/message/7367


// ****************************************************************************************
// INITIALIZATION OF EXPLORATION IN AMIBROKER
// ****************************************************************************************
Filter = 1;
NumColumns = 5;
Column0 = O; Column0Name = "O"; Column0Format = 1.2;
Column1 = H; Column1Name = "H"; Column1Format = 1.2;
Column2 = L; Column2Name = "L"; Column2Format = 1.2;
Column3 = C; Column3Name = "C"; Column3Format = 1.2;
Column4 = V; Column4Name = "V"; Column4Format = 1.0;

// END OF "INITIALIZATION OF EXPLORATION IN AMIBROKER" SECTION

// ****************************************************************************************
// AROON INDICATORS
// ****************************************************************************************
Period = 14;
LLVBarsSince = LLVBars(L, Period) + 1;
HHVBarsSince = HHVBars(H, Period) + 1;

Aroon_Down = 100 * (Period - LLVBarsSince) / (Period - 1);
Aroon_Up = 100 * (Period - HHVBarsSince) / (Period - 1);
Aroon_Osc = Aroon_Up - Aroon_Down;

// Exploration in Amibroker
AddColumn(LLVBarsSince, "LLVBarsSince", format=1.0);
AddColumn(HHVBarsSince, "HHVBarsSince", format=1.0);
AddColumn(Aroon_Down, "Aroon_Down", format=1.2);
AddColumn(Aroon_Up, "Aroon_Up", format=1.2);
AddColumn(Aroon_Osc, "Aroon_Osc", format=1.2);

// END OF "AROON INDICATORS" SECTION


// ****************************************************************************************
// GRAPHICS PRESENTATION IN AMIBROKER
// ****************************************************************************************
MaxGraph = 3;
Graph0 = Aroon_Down; Graph0Style = 8+4; Graph0Color = 7;
Graph1 = Aroon_Up; Graph1Style = 1+4; Graph1Color = 4;
Graph2 = Aroon_Osc; Graph2Style = 2; Graph2Color = 1;

Title = Name()
+ " - Aroon_Down = " + WriteVal(Graph0, 1.2) + " %"
+ ", Aroon_Up = " + WriteVal(Graph1, 1.2) + " %"
+ ", Aroon_Osc = " + WriteVal(Graph2, 1.2) + " %";

// END OF "GRAPHICS PRESENTATION IN AMIBROKER" SECTION


// ****************************************************************************************
// END OF CODE (ARRON.AFL)
// ****************************************************************************************
/**/
_SECTION_END();