CHAPTER 6

Rate of Change

Overview: The rate of change (ROC) oscillator is an alternative measurement of momentum, setting up a centerline as a “zero” value, with movement either above or below, each indicating varying degrees of momentum. A major drawback is the lack of limitation on movement away from the zero line; however, ROC does not measure averages, but does quantify changes in price over a set period and, as a result, changes in momentum.

Rate of change (ROC) is a centered oscillator, meaning the middle line value is treated as an index with a value of zero. The ROC line moves above or below this level and provides specific types of momentum signals.

ROC compares the current price of stock to the 12 periods immediately preceding the day. ...

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