Smoothed Rate of Change
Type
Momentum oscillator
Short introduction
The "Smoothed Rate of Change" ("SROC") indicator is a variant of the Rate of Change or the Momentum developed by Fred G. Schulman. It is based on the exponential MA (EMA - Exponential Moving Average) and helps identify market trends. The indicator is displayed in a separate chart.
Statement
The statement corresponds as far as possible to that of the momentum, with the difference that the signals come somewhat slower, but also somewhat more accurately.
Formula/calculation
SROC = (current EMA - previous EMA) รท (previous EMA) x 100
Signal line = MA of the SROC
The following MA variants can be used for smoothing via the parameters:
- Simple MA (SMA) - Default setting
- Exponential MA (EMA)
- Weighted MA (WMA)
Interpretation
The interpretation of the SROC follows the rules of momentum. According to Fred G. Schulman, the search for divergences between the SROC and the price development is of particular interest. A negative signal is generated when the underlying is still climbing new highs, while the SROC is no longer climbing new highs. A positive signal is generated when the underlying is still forming new lows, while the SROC is no longer forming new lows.
Default setting
Example: Smoothed Rate of Change
