Aroon Down [AroonDn]

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The Aroon Down function determines whether a financial data series is trending or trading based on the number of days since a new low has occured during a given period. Parameters ------------------ Low            The low price of the security for each given day. Period         The number of bars of data to include in the calculation, including the current value.                    For example, a period of 3 includes the current value and the two previous values. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including other price values and averaged prices. Indicator Value ------------------------ The Aroon Down indicator is calculated by taking the number of days since the lowest price for the given period occured and converting it to a strength from 100 to 0, with higher values indicating a more recent new low. Value     Meaning ---------------------------- 100        current day has lowest price for period   50        lowest price occured half of period ago     0        lowest price occured at beginning of period (at "period -1" bars ago) The value is not defined for a period of 1. Usage ----------- The Aroon Up and the Aroon Down combine to make the Aroon indicator, which is primarily used to detect trending versus trading prices. This is important since some indicators work well in trending markets, while others worth well in trading markets. However, typically, most indicators do not work well in both. The Aroon Up component rates the number of days since the last new high for the given period. The Aroon Down component rates the number of days since the last new low. Combined, they can be used to detect whether a security is trending (moving in a particular direction) or trading (staying relatively level). Persistent values above 70 in either indicator can indicate a trending market, especially when the other indicator is persistently below 30. For example, several weeks of the Aroon Up indicator remaining above 70 indicate that multiple new highs have been established. This typically occurs in an upward trending market. If the Aroon Down indicator remains below 30, no new lows are being established. This reinforces the fact that the market is trending in one direction. Parallel Aroon Up and Aroon Down values that are roughly equal (at any level) can indicate a trading market. In this case, new highs and new lows are being established at roughly the same rate. Crossovers can also be used to detect trends. When the Aroon Up crosses above the Aroon Down, the market is typically in a state of trending higher. Likewise, when the Aroon Down crosses above the Aroon Up, the market is typically in a state of trending lower. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by Tushar Chande.