The Aroon indicator was introduced by Tushar Chande in his book, "New Concepts in Technical Trading Systems".
Chande designed the Aroon indicator to distinguish between periods of trending versus trading ranges. Green indicates
uptrends and red indicates downtrends. As with all SwamiCharts, the lower
portion of the chart shows shorter lookback
periods and gives you an early view while the middle portion provides confirmation and the upper portion
(longest lookback periods) provides continuation.
SwamiCharts Aroon gives you additional insight into the confirmation and continuation of the
trend because you're visualizing a composite of lookback range from 12 to 48 bars.
An early emergence of an uptrend (downtrend) is identified by a transition from red to green (green to red) at the
lower lookback periods (bottom of the chart). If the trend is confirmed and continues, the indicator will
"stairstep" to longer lookback periods. An abrupt color change at multiple lookback periods often signals a significant change.
This indicator can often be effectively used in conjunction
with
Swami Market Mode or
Swami Swing Wave.
In the example chart for Netflix above, the middle chart shows SwamiAroon and
the bottom chart shows the traditional Arron indicator. The traditional Aroon
gives you a view at only a single lookback period, in this case 14 bars.
SwamiAroon shows a composite range of lookback periods and is typically easier to interpret. At the short lookback periods (bottom of chart)
SwamiArron gives you an early indication of a change in trend. Similarly at the longer lookback periods, you are able to have a
view of trend continuation.