Aroon indicator (Aroon Up and Aroon Down): reading new highs

The Aroon indicator asks a question most indicators ignore: not how far price has moved, but how long ago it made its most recent high and its most recent low. Tushar Chande introduced it in 1995. The name is Sanskrit for "dawn's early light," a nod to its aim of spotting the start of a new trend early.

The logic is simple. In a healthy uptrend, new highs keep coming, so the last high is always recent. In a downtrend, new lows keep coming. In a range, both the last high and the last low drift into the past. Aroon turns that into two lines, Aroon Up and Aroon Down, each on a 0–100 scale. This guide calculates both by hand on Costco's chart, shows how the crossovers behaved over a real year, and covers how Finabase computes Aroon.

What Aroon measures

Most trend tools average prices. Aroon ignores the size of moves entirely and looks only at timing. That makes it unusual and complementary:

• A stock that grinds up by small amounts, setting a fresh 25-day high every few days, gets a high Aroon Up even though its moving averages may look flat.
• A stock that spikes once and then drifts sideways sees its Aroon Up decay steadily, by 4 points a day with the default 25, as the spike ages.

Aroon therefore answers "is this market still making progress?" rather than "how strong is the move?"

The formula

A worked example on Costco

On October 29, 2026, the last day of the chart, here is how Costco (COST) scored with n = 25:

Both values match Finabase's chart. The reading says Costco made a 25-day high four sessions ago and its 25-day low is almost a full window old: an uptrend in progress. If Costco does not set a new high in the next few sessions, Aroon Up will tick down 4 points per day; one more quiet day takes Aroon Down to 0, and the day after that the September low drops out of the window entirely, so Aroon Down will reset to the age of the next-lowest low.

Reading Aroon

The 100 readings. Aroon Up at 100 means a new high today. Clusters of 100s mark a strong trend. Over the year, Costco's Aroon Up hit 100 on 29 days and its Aroon Down on 21 days.

The 70/30 zones. Chande suggested treating Up above 70 with Down below 30 as an uptrend, and the reverse as a downtrend. When both lines sit below 50, neither highs nor lows are recent: consolidation.

Crossovers. Aroon Up crossing above Aroon Down is the classic sign that recent highs have become more recent than recent lows. It is an early but noisy signal.

Parallel decline. When both lines fall together, the market has stopped making new extremes in either direction. A breakout from such a period often sends one line straight to 100.

Aroon on a real chart: Costco 2025–2026

Costco went from $920.18 at the end of October 2025 to $996.08 a year later, up about 8%, with a low of $844.06 on December 16 and a high of $1,096.50 on May 19, 2026. Aroon Up and Aroon Down crossed 10 times during the year.

The best crossing came early. Aroon Up crossed above Aroon Down on January 8, 2026, at a close of $915.31, three weeks after the December low. Costco was 9.4% higher 20 sessions later.

The later ones were weaker. On April 7 Up crossed above Down at $1,013.21; 20 sessions later the stock was only 0.3% higher. On May 13, at $1,033.08, Up crossed above Down again, just four sessions before the year's high, and 20 sessions later Costco was 5.6% lower. A trader following every Aroon crossover would have caught the January move and then given much of it back in the choppy spring.

How traders use Aroon

Trend detection. The cleanest use: a sustained period with Up near 100 and Down near 0 is a trend by definition, because new highs keep arriving and lows keep aging.

Spotting consolidations. Both lines below about 50 for an extended period flags a range, the kind of market where trend tools whipsaw.

Early warning. A sequence of lower peaks in Aroon Up during an uptrend, for example 100, then 84, then 68, shows highs are getting further apart: the advance is slowing.

With a strength measure. Aroon says whether new extremes are recent; the Average Directional Index (ADX): measuring trend strength says how forceful the movement is. Agreement between them, such as Aroon Up at 100 with ADX above 25, is stronger evidence than either alone.

Pitfalls and limitations

Choppy markets. As Costco's spring showed, in a wide range the lines can cross repeatedly as price tags the top and bottom of the range.

Size-blind. A new high by one cent counts the same as a breakout by 10%. Always look at the chart.

Window effects. When an old extreme leaves the 26-bar window, the reading can jump. That is a mechanical change, not new information about the market.

Comparison table

How Finabase calculates and scores Aroon

Finabase computes Aroon with TA-Lib's AROON function on each bar's high and low. A new Aroon study defaults to 25 periods and draws two lines, labeled Up and Down, in their own panel below the price chart.

Aroon (25) is listed in the technical gauge with its latest value (the gauge shows the Aroon Down line, the study's first output), and it carries no Buy or Sell rule, so it always counts as neutral there. To use Aroon as a signal, read the two lines on the chart, or add the Aroon Oscillator, which puts the same information on one line.

Frequently asked questions

What does an Aroon Up of 100 mean?

The highest high of the last 25 bars (with the default setting) was made on the current bar. A run of 100 readings means the market keeps setting fresh highs.

What is the best Aroon period?

Chande used 25 on daily data, and it is Finabase's default. Shorter periods (14) react faster and cross more often; longer ones (50) describe longer trends.

Is Aroon a leading indicator?

Not really. It measures the timing of highs and lows that have already happened. It can show a new trend relatively early, because one fresh high moves Aroon Up straight to 100, but a single high is often not a trend.

Summary

Aroon measures how recently a market set its last high and its last low, scaled from 0 to 100. It needs nothing but highs and lows and ignores the size of moves, which makes it a useful complement to price-based tools. On Costco's chart its first crossover of the year came three weeks after the low and preceded a 9.4% gain; the later ones came in a choppy market and did not help. Read the two lines together, watch the 100 readings, and pair Aroon with a strength measure.