The Rate-of-Change (ROC) is a technical indicator that quantifies the percentage difference between the current price and the price from x days prior. This indicator, often simply called Momentum, serves as a pure momentum oscillator.

The ROC is displayed below the price chart, creating an oscillator that oscillates above and below the zero line as the Rate-of-Change transitions from positive to negative. Similar to other momentum indicators, ROC features overbought and oversold zones that can be modified based on market conditions. It is important to note that a currency pair can be oversold or overbought and remain in that state for a prolonged period.

Generally, prices are on the rise as long as the Rate-of-Change remains positive. In contrast, prices decline when the Rate-of-Change is negative. ROC moves into positive territory as price increases accelerate.

An upward movement in the Rate-of-Change indicates a significant price increase. If ROC is positive and rising, it suggests that buying pressure is increasing. Conversely, if ROC is positive but declining, buying pressure is diminishing, indicating that the price increase is slowing.

ROC delves deeper into negative territory as a price decline accelerates. A sharp drop in ROC signifies a steep price decrease. When ROC is negative, it indicates selling pressure, leading to a price drop. The more negative the ROC, the stronger the selling pressure, resulting in a faster price decline.

When ROC crosses above 0, it is typically viewed as a buy signal. Conversely, when ROC crosses below 0, it is often interpreted as a sell signal.

ROC is calculated as the percentage change between the current price and a previous closing price from n periods ago.

ROC = [(Today’s Close Price – Close Price n periods ago) / Close Price n periods ago] x 100

For a 10-day period, ROC is calculated as follows:

ROC = [(Today's Close Price – Close Price from 10 days ago) / Close Price from 10 days ago] x 100