Investment Studio > Expressions > Functions > Indicator > ARD
float array[*][2] ard(float array[*][2] dc, integer days)
Returns a two-column array containing dates (first column) and corresponding Aroon Down index (ARD) values (second column). Given n input rows in dc, n - days + 1 rows are returned.
dc is a two-column array containing dates (first column) and corresponding daily closing prices (second column). The array is assumed to be time-sorted, with earlier dates preceding later dates.
Automatic type conversion allows the use of date strings as arguments instead of explicit date values.
days > 0 is the length of the time frame, i.e. the number of trading days contributing to the calculation of each day's ARD value.
Interpretation
ARD is a downtrend strength indicator. It's computed by subtracting the number of days since the lowest close in the given time frame (often set to days = 25) from days and multiplying by 100 / days. The result is a number between 0 (if the price has been going up throughout the time frame, making the first day the lowest close) and 100 (if the price has been going down throughout the time frame, making the last day the lowest close).
ARD values above 70 indicate a strong downtrend. When the ARD falls below 50, it indicates that the downtrend is running out of steam. Values below 30 indicate that a strong uptrend is underway.
The ARD is usually plotted together with its uptrend equivalent, the ARU, and/or with the Aroon Oscillator (ARO) defined as the difference ARU - ARD.
For a real life example, consider Intel (NASD:INTC) from June 1 to December 31, 2001:
The top chart shows the price and a 20 day EMA (blue line). The bottom chart shows the 25 day ARD (red line) and ARU (green line); the threshold levels 30, 50 and 70 are marked in gray.
The first thing to notice here is how quickly an reliably the ARD reacts to new trends. In particular, it jumped to peak levels on August 20, at the very beginning of the August-September slide (two days after prices first closed below the 20 day EMA), and then stayed well above 50 until October 11 (one day after prices first closed above the 20 day EMA). Throughout the price slide, the strong downtrend level of 70 was pierced only once, and then only for a day (September 4). When it was decisively crossed, this coincided with the first confirmation day of the double bottom put in place by price on October 3.
This is all very much by design: "Aroon" (from the world for "early light of dawn" in Sanscrit) was developed (by Tushar Chande, in 1995) with the explicit goal of catching new trends early on.
A property not immediately apparent from this example is the adaptivity of the Aroon indicators. Looking at the same chart from the point of view of the ARU really makes this property stand out.
ARD and ARU often decline in tandem (as in June in the above example). This indicates a consolidation phase, i.e. sideway price movement within a previously established trading range. Note that the downward slope is simply the inverse of the number of days in the time frame.
Buy and sell signals for Aroon are usually defined in terms of the Aroon Oscillator (ARO) rather than of the underlying ARD and ARU.
Example
Assuming standard US date format settings,
=ard({{"1/1/1990", 12}, {"1/2/1990", 11}, {"1/3/1990", 12}}, 2)
returns {{32875, 100}, {32876, 50}}. 32875 is the date code for 1/2/1990; 100 is the 2 day ARD value for that date: the day's close (11) is the low of the (2 day) time frame under consideration, so ARD peaks here. 32876 is the date code for 1/3/1990; 50 is the 2 day ARD for that date.