Description
Rate Of Change With Bands (ROCWB) is a technical indicator developed by Vitali Apirine. It has the same calculation basis as the Rate Of Change (ROC) oscillator: the percentage change of a security or index price momentum to its past value. However, instead of outputting a single line, ROCWB calculates ROC-based deviation bands that act as overbought and oversold levels. A moving average of ROC is also calculated for additional information.
Generally, positive readings of ROC indicate an uptrend, and negative readings indicate a downtrend. High volatility levels tend to result in band widening. Conversely, band contraction may signify that volatility is decreasing.
When the average ROC breaks out of the upper band, the security or index may be overbought. ROC average readings below the lower band indicate that the security or index may be oversold.
Input Parameters
| Parameter | Description |
|---|---|
price
|
The type of price to be used in calculations. |
roc length
|
The length to calculate the rate of change with. |
average length
|
The length to calculate the moving average with. |
rms length
|
The length to calculate root mean square with. |
average type
|
The type of moving average to be used in calculations: simple, exponential, weighted, Wilder's, or Hull. |
Plots
| Plot | Description |
|---|---|
ROCAvg
|
The average Rate Of Change plot. |
+RMS
|
The upper Rate Of Change deviation band. |
-RMS
|
The lower Rate Of Change deviation band. |
ZeroLine
|
The zero level. |
Further Reading
1. "Rate Of Change With Bands" by Vitali Apirine. Technical Analysis of Stocks & Commodities, March 2021.
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.