You may have heard about the Aroon Oscillator. It is a powerful indicator and a favourite among crypto traders. For Aroon enthusiasts, there is a good news: there is an advanced version of the Aroon Oscillator called Aroon Up & Down. While it shares many similarities with the Aroon Oscillator, it offers some unique features that set it apart. Let’s explore this indicator. Ready?
1. Aroon Up & Down: What A Crypto Trader Should Know
Aroon Up & Down is an efficient tool used in the crypto market. It is based on the Aroon Indicator created by Tushar Chande. It helps crypto traders predict when a cryptocurrency might shift from going up or down to moving sideways.
2. How Does Aroon Up & Down Work: The Basics
The Aroon Up & Down indicator is an oscillator that ranges from 0 to 100. It has two lines: Aroon Up and Aroon Down. Its default value is 14-day.
The Aroon Up line measures how close the current crypto price is to the highest price it reached in the last 14 days. If it just hit a new high, the Aroon Up value shows 100.
The Aroon Down measures how close the current crypto price is to the lowest price in the last 14 days. If it just reached a new low, the Aroon Down value shows 100.
If there were no new highs in the last 14 days, Aroon Up is at 0. Similarly, if there were no new lows, Aroon Down is at 0.
3. How to Calculate Aroon Up and Down: The Simplest Way
| Aroon Up = [(Number of periods – Number of periods since the highest high) / Number of periods] * 100Aroon Down = [(Number of periods – Number of periods since the lowest low) / Number of periods] * 100 |
Aroon up looks at how many periods it has been since the highest high in the chosen timeframe. It subtracts this from the total number of periods and then divides by the total number of periods. Finally, it multiples by 100 to get a percentage. Aroon Down does the same but for the lowest low.
4. Steps to Launch Aroon Up & Down on a TradingView Chart
Here are the steps to launch Aroon Up & Down on a TradingView chart:
- Log in to your TradingView account
- Choose the cryptocurrency you want to analyse and open it
- Find the ‘indicator’ button on the top menu
- In the indicator menu, look for ‘Aroon Up & Down’
- Click on ‘Aroon Up & Down’ to add it to your chart
- You can customise the indicator settings, like the number of periods to consider
- Click ‘OK’
- Start analysing for trading signals
5. Interpreting Aroon Up & Down Signals: All You Should Know
Interpreting Aroon Up & Down signals are simple. The prime signals are:
When Aroon Up and Aroon Down are both moving lower and are close to each other, it means the market is in a consolidation phase.
If Aroon Up drops below 50, it means the uptrend is losing strength. Similarly, when Aroon Down goes below 50, it indicates the downtrend is losing its momentum.
Values above 70 in either Aroon Up or Aroon Down signal a strong trend: If Aroon Up, it is uptrend; and if Aroon Down, it is downtrend.
When Aroon Up crosses above Aroon Down, it can indicate the start of an uptrend. Conversely, when Aroon Down crosses above Aroon Up, it may signal the beginning of a downtrend.
Endnote
Aroon Up & Down is a valuable tool for crypto traders. Developed from the Aroon indicator, it helps traders anticipate shifts from trends to sideways movements. Understanding how to use it and interpret its signals can assist traders in making informed decisions. By following the simple steps to apply it on TradingView charts, traders can analyse crypto trends and recognise consolidation phases, loss of momentum, strong trends, and potential reversals. This knowledge empowers crypto traders to navigate the dynamic crypto market with confidence.