Like the rest of the momentum indicators, the Rate of Change (ROC) indicator gives us the possibility to determine the strength of a trend, as well as the weakness and probable change of the trend, however; there are signals that give us an orientation of the price action and the trend.
Based on the previous paragraph, one way to use the Rate of Change (ROC) indicator as an entry tool to trade a trend is to wait for the confirmation of the price action crossing above the zero (0) line in the case of a long signal, or the price action crossing below the zero (0) line in the case of a short signal.
Bullish trend confirmation signal
If once the Rate of Change indicator is above the zero (0) line and continues to rise, it shows that the trend is not only bullish but the speed of the uptrend is accelerating, therefore, this can be interpreted as a bullish trend confirmation signal, and to give a visual example of signal of a bullish trend confirmation I will share the following chart of the LTC/USDT pair.
Bearish trend confirmation signal
On the other hand, when the Rate of Change indicator is below the zero (0) line but falling, this price action shows that the downtrend is increasing its speed, therefore, this can be interpreted as a downtrend confirmation signal, and to give a visual example of a downtrend confirmation signal I will share the following chart of the XTZ/USDT pair.
Signal of trend change
One way to determine a potential trend change using the Rate of Change indicator data, is when the ROC indicator is below the zero line, but then starts to rise steadily and steadily, an action that can be interpreted as a sign that the speed of the downtrend is losing strength, and therefore in the following there will be a change in the trend, to give a visual example of a trend change signal I will share the following chart of the RVN/USDT pair.
It is worth noting that in order to achieve a higher degree of success, the ideal is to combine the ROC indicator with other technical analysis tools that provide a higher probability of success in our tarding operations.
SOURCES CONSULTED
Cory Mitchell Price Rate Of Change Indicator (ROC). Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: Coinmarketcap
This is interesting, my knowledge without limitations, but I think it is worth putting this into practice. Although I do not have the funds to do so at this time, I will take it into consideration for future experiments.
#affable #venezuela
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Hi @leonelb
The trandig is not complex, not difficult is to have mental control when making decisions to operate in buying or selling. With little capital for example with about $15 you can start testing to see how it goes for you.
Best regards, be well.
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