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PART FOUR - Looking Inside the Market Te... > CHAPTER 19 - Rate-of-Change Indicato...
CHAPTER 19
Rate-of-Change Indicators
Rate-of-change indicators are simple to calculate and can be exceptionally informative, particularly when applied to commodities, currencies, and fixed-income markets in conjunction with rate-of-change indicators applied to macroeconomic indicators, such as the Consumer Price Index (CPI) and exports.
I use rate-of-change (ROC) indicators to measure percentage changes in markets and economic statistics, as a nominal gauge, and more often, to compare with other ROC indicators.
One of the most effective ways to compare ROC indicators is over various time frames, which will allow you to assess whether momentum is accelerating, decelerating, or stagnating. If gold’s 100-day ROC is trending higher, and the rate crosses above a rising 52-week ROC, this would mean that the market is appreciating more rapidly on a short-term basis, with both rates accelerating.