Rate of Change Bitcoin Analysis & Rate of Change Trading Signals

Rate of Change indicator is used to calculate how much bitcoin price has changed within a specified number of bitcoin price periods. It calculates the difference between the current candlestick and the bitcoin price of a selected number of previous candlesticks.

The difference can be calculated using Points or Percentages. Rate of Change moves in an oscillation manner, where it oscillates above & below a zero center-line level. Levels above zero are bullish while those below zero center-line level are bearish.

The greater the changes are in the bitcoin prices the greater the changes in the ROC.

Rate of Change Bitcoin Indicator - ROC, Rate of Change Crypto Indicators

BTCUSD Analysis & Generating Trading Signals

Rate of Change indicator can be used to generate cryptocurrency signals using a number of methods, the most common ones are:

BTCUSD Trading Crossover Trading Signals

Bullish Signal - buy cryptocurrency signal is generated when the ROC crosses above the zero center line

Bearish Signal - sell cryptocurrency signal is generated when the Rate of Change crosses below the zero center line.

Bullish Bitcoin Trend Bearish Bitcoin Trend Indicator - ROC, Rate of Change BTCUSD Indicators

Overbought/Oversold Levels:

Overbought - The higher the reading the more overbought bitcoin is. Values that are above the overbought level imply that a bitcoin price is overbought and there is a pending bitcoin price correction

Oversold - The lower the reading the more oversold bitcoin is. Values below the oversold level imply that bitcoin is oversold and there is a pending bitcoin price rally.

However, during strong trending markets the bitcoin price will remain in the Overbought/Oversold Levels for a long time, and rather than the bitcoin price reversing the bitcoin price bitcoin trend will continue for quite some time. It is therefore best to use the crossover signals as the official buy & sell bitcoin signals.

Bitcoin Trend-Line Breaks

Bitcoin Trend lines can be drawn on ROC indicator just the same way bitcoin trend lines can be drawn on bitcoin price charts. Because The Rate of Change is a leading indicator, the bitcoin trend lines on the indicator will be broken before those on the bitcoin price charts. A bitcoin trendline break on the Rate of Change is an indication of a bullish or bearish reversal bitcoin signal.

Bearish reversal- Rate of Change readings breaking above a downward bitcoin trendline warns of a likely bullish reversal.
Bearish reversal- Rate of Change readings breaking below an upward bitcoin trendline warns of a likely bearish reversal.

Divergence BTCUSD Trading

Rate of Change can be used to trade divergences, and to identify potential bitcoin trend reversal cryptocurrency signals. There are four types of divergences: classic bullish, classic bearish, hidden bullish & hidden bearish divergence.