In this post I will socialize content on what is the usefulness of the ROC indicator in determining decisions when finding buy and sell signals, and also in identifying overbought and oversold signals, this in order to expand the theoretical and technical aspects of this important trading tool.
Buy Signal
In an uptrend the direction and price action in each respective retracement or correction project buy signals, since in each retracement there are oversold conditions, therefore, these scenarios serve as an alert to be prepared to take a buy position, as long as the Rate of Change indicator starts to approach the zero (0) line, action that can be used to take buy decisions, to give a visual example of a buy decision signal with oversold signal I will share the following chart of the TFUEL/USDT pair.
Sell Signal
One of the best ways to exit in sell using the Rate of Change indicator, is if after a long uptrend the price action starts to show weakness, action that can be contrasted if the ROC indicator line starts to fall approaching the zero (0) line, behavior that can be used to make sell decisions, to give a visual example of a sell decision signal I will share the following chart of the ADA/USDT. pair
Identifying overbought and oversold signals
The greatest operational advantage of momentum indicators is precisely when a financial instrument is in an overbought or oversold zone, such is the case of the Exchange Rate indicator, which projects overbought signals when the ROC line rises above zero (0) and increases to an estimated 4%.
In the opposite case, when the Exchange Rate indicator projects oversold signals when the ROC line falls below the zero (0) line and depreciates at an estimated 4%.
To give a visual example of identifying Overbought and Oversold signals I will share the following chart of the BTC/USDT. pair
I hope that the information provided here on the usefulness of the ROC indicator in determining decisions when finding buy and sell signals will help you to improve your trading strategies.
SOURCES CONSULTED
Cory Mitchell Price Rate Of Change Indicator (ROC). Link
OBSERVATION:
The cover image was designed by the author: @lupafilotaxia, incorporating image: Coinmarketcap
Greetings @lupafilotaxia, again another great delivery that you share with us this time, no doubt, the ROC indicator adapts to our trading strategy and allows us to make decision to buy or sell on a crypto asset, hence its use has become popular, which allows us to diversify our system to operate in the cryptoasset market.
Valuable contribution, greetings.
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Hello @madridbg
That's the goal, to present information about trading that somehow permote us to diversify our system to trade in the cryptoasset market.
Best regards, be well.
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Greetings @lupafilotaxia,
Indeed, We must analyze the ROC percentage before making any decision on a particular asset,
ROC is very useful for making in further dicisions
Excellent read : )
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Hi @winy
I don't understand, why you say that "ROC is very useful for making subsequent decisions"?
Best regards, be well.
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Hello @lupafilotaxia!
I don't think I've ever seen a video or ever got the chance to use this indicator. I'm really happy that you have shared that with us, great chance to have more knowledge and power in trading since it's risky game and requires good indicators.
Thanks for sharing, I will make sure to know more about this indicator and see how I can apply it.
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Hi @lennyblogs
Good that you have repetivity with socialized content, I will be sharing more information about ROC indicator,
Best regards, be well.
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