What is Rate of Change (ROC)?

What is Rate of Change (ROC): A chart indicator/oscillator used in the technical analysis of financial markets. Its primary purpose is to track market momentum, trend strength, and overbought/oversold conditions.

Category: Technical analysis indicator

How is Rate of Change (ROC) Used: The Rate of Change (ROC) is an oscillator that measures the difference between the most recent closing price and the closing price x number of periods ago. In this way, it measures the current market momentum. It’s typically used to determine trend changes, appropriate trade entry/exit levels, overbought/oversold conditions, and price-oscillator divergences.

What Does Rate of Change (ROC) Consist of: ROC is presented as a line that is unbounded, with fluctuations above and below a zero line. Historical indicator levels are used to determine if a market may currently be overbought, oversold, or neutral. The indicator is usually placed either above or below the price chart.

What Does Rate of Change (ROC) Look Like:

Chart of Rate of Change (ROC)
Chart of Rate of Change (ROC) – Source: TheTechnicals.com and TradingView

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