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Rate of Change Gold Trading Analysis and Rate of Change Gold Trading Signals

Rate of Change, ROC indicator is used to calculate how much xauusd price has changed within a specified number of xauusd price periods. It calculates the difference between the current candlestick and the xauusd 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 and 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 gold prices the greater the changes in the ROC.

Rate of Change XAUUSD Indicator

XAUUSD Trading Analysis and Generating XAUUSD Trading Signals

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

Crossover Signals

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

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

Bullish XAUUSD Trend Bearish XAUUSD Trend Indicator


Overbought/Oversold Levels:

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

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

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

XAUUSD Trend Line Breaks

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

  • Bearish reversal- Rate of Change readings breaking above a downward gold trend line warns of a likely bullish reversal.

  • Bearish reversal- Rate of Change readings breaking below an upward gold trend line warns of a likely bearish reversal.

Divergence XAUUSD Trading

Rate of Change can be used to trade divergences, and to identify potential gold trend reversal xauusd trading signals. There are four types of divergences; classic bullish, classic bearish, hidden bullish and hidden bearish divergence.


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