Rate of Change Indicator (ROC)
Definition of 'Rate of Change Indicator (ROC)'
The ROC calculation compares the current price with the price a given number of periods ago. The indicator plot forms an oscillator that fluctuates above and below a zero line as the Rate-of-Change moves from positive to negative.
Trading signals using the ROC momentum oscillator include:
- centerline crossovers (watch for whipsaw)
- bullish divergences
- bearish divergences
- overbought readings
- oversold readings
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