Rate of Change (ROC)

The Rate of Change belongs to the Momentum Oscillator category and as a result the ROC signals include crossovers, centerline, divergences, overbought and oversold. It measures the percentage increase in price over a given time period. In other words we can say that the ROC measures the speed at which prices are changing. In a histogram ROC is represented by the slope of a line.

Calculation
ROC = (Close - Close n periods ago)
Close n periods ago
x 100
Signals
  • When the value is greater than zero it indicates an increase in upward momentum.
  • When the value is less than zero it indicates an increase in selling pressure.
  • At times the ROC line may go down while the price of the instrument is goes up, this implies that a sharp decline is coming.