A positive ROC indicates a potential buy, while a negative ROC indicates a potential sell.The ROC momentum indicator measures the speed at which prices change.It measures the percentage change in price over a defined look back period.

Divergences between the indicator and the price action are regarded as especially powerful signals, when they coincide with the typical indicator-only signals detailed above.

Both lines crossing down below 80, with fast line crossing below average line, for a sell signal.

Both lines crossing up above 20, with fast line crossing above average line, for a buy signal or.

The cross of the stochastic fast line over the slower average line is the basic signal, but most traders want to see this combined with another signal such as:.

A value below 20 can indicate oversold conditions, while a value above 80 can indicate overbought conditions.

Like the RSI indicator, its value ranges from 0 to 100, from most bearish to most bullish.

The Stochastic Oscillator compares the current price to the range of closing prices over the look back period, and prints two lines, the value of the indicator and an average of its recent values.

Some traders also trade histogram crossovers, buying when the histogram crosses above the MACD line, or selling when it crosses below it.

A crossover of the MACD signal line below the MACD line is a sell signal and is widely regarded as more powerful if also showing negative divergence and an increase in volume.

A crossover of the MACD signal line above the MACD line is a buy signal and is widely regarded as more powerful if also showing positive divergence and an increase in volume.

The MACD signal line is a 9 EMA in default settings.

The difference between the two EMAs is represented by the MACD histogram which crosses the MACD line at zero. The 26 EMA is subtracted from the 12 EMA in default settings, which can be changed.

The MACD indicator measures the relationship between two exponential moving averages ( EMAs) over the look back period, the 26 EMA and the 12 EMA.

Moving Average Convergence Divergence (MACD)

RSI crosses can be confirmed as signals by an increase in volume, if a reliable volume indicator is available – Forex traders tend to use tick volume, while futures traders may access real volume data.

More reliable trading signals occur when a positive divergence forms below 30 or a negative divergence above 70 (more later about divergence).

A reading above 70 may indicate overbought conditions, and a cross from above 70 is often used as a short trade entry signal.

A reading below 30 may indicate oversold conditions, and a cross from below 30 is often used as a long trade entry signal.

The most basic use of the RSI is to indicate bullish conditions when the reading is above 50, or bearish conditions when the reading is below 50.

A reading of 100 represents the fastest upwards momentum, while 0 the fastest downward momentum.

The RSI indicator always produces a value between 0 and 100, but the extreme points are almost never touched.

The RSI indicator measures the ratio between upward and downward price movements over the look back period.

Momentum indicators are essential tools for trend traders but can also be used to help spot trend reversals, or to adjust stop loss and take profit orders.

Momentum indicators provide traders with crucial information about the strength or weakness of an asset.

Momentum indicators are algorithms applied to historical prices which measure the direction and speed of price changes over a given period.

Squeeze momentum indicator