Name, Sometimes Called:
Aroon 270
Brief Description:
Aroon 270 is a long-term use of the Aroon
Oscillator. It consists of three associated leading trend indicators:
two lines, Aroon(up) and Aroon(down), and Aroon(oscillator), which
is the difference of the two.
Definitions, Formulas:
Aroon(up) = 100 x ( ( n – H ) / n
)
Aroon(down) = 100 x ( ( n – L ) / n )
Aroon(oscillator) = Aroon(up) – Aroon(down)
where
n = the number of periods to be tested
H = is the number of periods since the highest high during the
past n periods
L = is the number of periods since the lowest low during the past
n periods
We use n=270.
The ratios calculated
in Aroon(up): ( n – H ) / n
in Aroon(down): ( n – L ) / n
will always be between zero and one. To create a range between
zero and 100, each ratio is multiplied by 100.
Since the Aroon(oscillator) is the difference between Aroon(up)
and Aroon(down), it can range between +100 and –100.
For an extended discussion of the Aroon indicator’s trends,
see the Aroon TAI section titled “Some
discussion of Aroon.”
Positive Development Calculation:
For this indicator, a new positive development (NPD)
occurs when Aroon(up)(270) crosses over Aroon(down)(270), that is,
when Aroon(up)(270) x+ Aroon(down)(270).
Aroon(270) is no longer a positive development when either of these
two conditions occurs:
a) Aroon(up)(270) x- Aroon(down)(270)
OR
b) The Aroon(up)(270) AND Aroon(down)(270) lines are parallel
and slope downward
AND Full Stochastics(180,3,3) x- 75. See Full
Stochastics.
Another positive development occurs only at the next positive crossing,
namely:
Aroon(up)(270) x+ Aroon(down)(270)
If this TAI is still positive tomorrow, it will no longer be new,
but will be a cumulative positive development (CPD).
If this TAI was a new positive development (NPD)
yesterday, and is still positive today, then it becomes a cumulative
positive development (CPD).
History:
Aroon is used to determine whether an issue
is trending
or
non-trending and how strong the trend is. Aroon measures the
number of periods that have passed since prices reached recent high
and low values. Developed by Tushar Chande in 1995, “Aroon”
means “dawn's early light” in Sanskrit. Chande chose
that name since this indicator is designed to reveal the beginning
of a new trend. The Aroon 270 examines long-term trends.
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