Rate of Change (ROC)
It is a Momentum indicator that measures the percentage change in price over the reference period.
It is calculated by comparing the current price with the price of 'n' periods back. With the values thus calculated, an indicator is generated that fluctuates above and below the zero line, depending on whether it takes a positive or negative value. Formula: ROC = [(Current Price - Price n periods ago) / Price n periods ago] × 100.
Divergences between ROC and price can suggest potential trend changes. Extreme positive/negative values might indicate overbought/oversold conditions. The ROC helps traders assess the velocity and magnitude of price movements.
