Graphical depiction of the '' time '' oscillator AROON.
In the above chart (euro dollar daily) we have a representation of the indicator.
AROON UP-DOWN (meaning "the first light of the egg!") is a "time" oscillator based on the logic of the new high-low, devised by tushar chande. With the initial aim of detecting the shift changes and the latter used with Successful as a long-term trading system. (The manufacturer proposes as the 14 days period)
mathematical formula
AROON UP 14 = [(14-number of days absent from the current closing of high 14 days)] / 14X100
AROON DOWN 14 = [(14-number of days closing the current closing time from the low 14 days)] / 14X100
LOGIC
The INDICATOR relies on the basic logic that "WHO WILL BE HIGH PERIODS AND TIMES WHICH HAVE BEEN REMOVED ARE LOW PERIODS THESE UPDATE THIS VOLUME IS SO POWERED AND POSSIBLE WHAT SUSTAINABLE - AND THE RESPONSE FOR THE "
As we can see in the original diagram, the aroon consists of 2 intersecting lines up and down showing and the prevalence of one or the other (anode-down) tension by crossing them, but also their intensity through the slope and the levels they approach.
B.C. on the day the price will hit new high 14 days, the aroon up will be worth 100! (and the inverter if we talk about the line down) if at the same time the biggest 14 day was made before 14 days then the down would be 0! (the example is extreme with a very strong upward trend).
WHERE THE UP LINE HAS A PRICE ABOVE 70 AS 100 MEANS THAT YOU HAVE RECALL NEW NEW HIGHS AND WHEN THE PRICE HAS BEEN BEYOND 30 TO 0 MEANS THAT IT HAS A TIME TO SUCCESS NEW HEADS (APPLICABLE FOR THE DOWN LINE)
It is obvious that in order to have a better image of the stress we will have to combine the 2 lines up-down where we draw the following conclusions
1) (anodic stress description)
when the up line moves above the 70 level and down line below 30 level (at the same time), we have a strong upward trend since the price is getting continuously high, and it does not make it almost new.
2) (downside description)
when the down line moves above the 70 level and up line below 30 level (at the same time) we have a strong downward trend since the price is running continuously low and while it is not nearly new high.
3) (transaction area description)
when the up-down lines are parallel and fall together with a negative slope, this means that neither new high nor new low develops.
4) (reversal description)
when the lines are crossed with inverse spikes, then we have a change in the pitch. It is wrong if it drops down and the upscaling is positive with a negative downward sliding down and Up attempts 70's approach with 30 down and we have reverse of the downward direction. The exact inverted state will be inversely inverted.
Although a bit "complicated" in the description when the reader "gets used" to "read" correctly this famous indicator (time oscillator & high low) then its use is highly recommended.
(Note that it can be used in all time frames with different parameters of periods, eg 24 per hour would mean 1 day while 18 at four o'clock 3 days - examination of the course of high low per hour & four hours respectively)