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Rate of Change XAUUSD Technical Analysis and Rate of Change XAUUSD Signals

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

Rate of Change Technical XAUUSD Indicator



XAUUSD Technical Analysis and Generating XAUUSD Signals

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


Crossover Signals

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

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

Bullish XAUUSD Trend Bearish XAUUSD Trend Indicator


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Oversold/Overbought Levels:


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


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


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


XAUUSD Trend Line Breaks

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



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

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


Divergence XAUUSD

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

 

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