Technical Analysis, Studies, Indicators:
Volume ROC (Rate of Change)
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The Volume Rate of Change (Volume ROC) is identical to
the ROC (Rate of Change) technical indicator that displays the percent
difference between the current Volume and the volume n-time periods ago.
The formula for calculating Volume ROC is
Volume ROC = (Volume - Volume N periods ago)
/ Volume N periods ago * 100
Similarly to the ROC, the Volume ROC is an oscillator that
fluctuates above and below the zero line. When volume increases the Volume ROC
moves up and when the price decreases the Volume ROC falls. The greater the
change is in volume, the greater the change is in the Volume ROC.
High volume ROC may indicate volume surges and could used to
define the overbought/oversold moments that could lead to the trend reversal.
It is a good practice to scroll the chart back in the recent
past (several frames back) to see for connections between Volume ROC, volume
surges and the price reversal and try to apply it to the current market.
It could be a good practice to use this indicator in
conjunction with other price based technical indicators.
Chart 1: ROC (Rate of Change)
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