14-Day & 21-Day Rate of Change (ROC) Calculator
Calculation Results
Understanding the Rate of Change (ROC) Indicator
The Rate of Change (ROC) is a pure momentum oscillator used in technical analysis to measure the percentage change in price between the current period and a specific period in the past. It effectively measures the speed at which a trend is moving.
Why use 14-day and 21-day periods?
In the world of trading, different timeframes provide different signals:
- 14-Day ROC: This is a standard short-term momentum indicator. It reacts quickly to price shifts and is excellent for identifying short-term overbought or oversold conditions.
- 21-Day ROC: Representing roughly one trading month, the 21-day period smooths out some of the daily noise. It is often used to confirm medium-term trend strength.
The ROC Formula
The calculation is straightforward:
ROC = [(Current Price – Price "n" periods ago) / Price "n" periods ago] x 100
Interpreting Your Results
The ROC oscillates around a zero line. Here is how to read the values:
- 📈 Positive ROC (> 0): Upward momentum is increasing. If the ROC is rising, the price is accelerating upwards.
- 📉 Negative ROC (< 0): Downward momentum is increasing. If the ROC is falling, the price is accelerating downwards.
- ⚖️ Crossing Zero: When the ROC crosses from negative to positive, it is often seen as a bullish signal. Conversely, crossing from positive to negative is seen as bearish.
Practical Example
Suppose a stock is currently trading at $110. Exactly 14 days ago, it was at $100. The 14-day ROC would be:
((110 - 100) / 100) * 100 = 10%
This indicates a 10% increase in value over the last 14 days, showing strong upward momentum.