The Volume Rate of Changeindicator shows clearly whether or not volume is trending in one direction oranother. Sharp Volume ROC increases may signal price breakouts. V-ROC is theindicator that shows whether or not a volume trend is developing in either anup or down direction. The Volume ROC shows the speed at which volume ischanging. This can be quite informative as almost every significant chartformation is accompanied by a sharp increase in volume.
The V-ROC shows the rate ofchange measured by volume. You will need to divide the volume change over thelast n-periods by the volume n-periods ago. The answer will be a percentagechange of the volume over the last n-periods.
With most markets, the volume canbe expected to within a constant range over time. When volume moves outsidethis range and begins to trend either upwards or downwards, then a capitulationof one sort or another can be expected. Using this breakout from the average,the VROC is best used as a confirmation indicator to other studies.
If the volume for the currentperiod is higher than n-period ago, the rate of change will be a plus number.If volume is lower, the ROC will be minus number. This allows looking at thespeed at which the volume is changing.
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