Rate of Change Bitcoin Trading Analysis and Rate of Change Bitcoin Trading Signals

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

Bitcoin Trading Analysis and Generating Bitcoin Trading Signals

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

Crossover Signals

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

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

Overbought/Oversold Levels:

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

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

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

Bitcoin Trend Line Breaks

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

• Bearish reversal- Rate of Change readings breaking above a downward bitcoin trend line warns of a likely bullish reversal.
• Bearish reversal- Rate of Change readings breaking below an upward bitcoin trend line warns of a likely bearish reversal.

Divergence Bitcoin Trading

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