Understanding Rate of Change in Securities

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What does the 40-50 zone on the RSI chart represent in an uptrend or bull market?

Support (correct)

Resistance

Oversold condition

Overbought condition

What condition indicates that prices are rising?

Rate-of-Change (ROC) is fluctuating

Rate-of-Change (ROC) is zero

Rate-of-Change (ROC) is negative

Rate-of-Change (ROC) is positive (correct)

In a bear market, which range does the RSI typically stay within?

40-90

30-50

10-60 (correct)

70-100

According to J.Welles Wilder, what is the downside limit for securities?

100% decline Signup and view all the answers

Which oscillator measures the speed and change of price movements?

Relative Strength Index (RSI) Signup and view all the answers

What does it indicate when the RSI makes a lower high followed by a downside move below a previous low?

Top Swing Failure Signup and view all the answers

How can a divergence between underlying prices and the RSI signal a price reversal?

If prices make a new high or low not confirmed by the RSI Signup and view all the answers

What level is considered overbought for the traditional Relative Strength Index (RSI) value?

Above 70 Signup and view all the answers

When does the Relative Strength Index (RSI) indicate oversold conditions?

Below 30 Signup and view all the answers

During an uptrend, where does the RSI tend to be in terms of resistance?

Between 50-60 Signup and view all the answers

What does the Rate-of-Change (ROC) signal during an advance or a decline?

Identifiable extremes signaling overbought and oversold conditions Signup and view all the answers

What do double tops and bottoms, trend lines, and support/resistance indicate when they form on the RSI chart?

Chart patterns that may not show on the underlying price chart Signup and view all the answers

What does the Rate-of-Change (ROC) indicator compare?

Current price with the price a few days ago Signup and view all the answers

When does the Rate-of-Change (ROC) indicate that prices are rising?

When the ROC remains positive Signup and view all the answers

How does the Rate-of-Change (ROC) indicator reflect a sharp price advance?

By experiencing an upward surge Signup and view all the answers

What does it mean when the Rate-of-Change (ROC) expands into positive territory?

An advance is accelerating Signup and view all the answers

Which of the following best describes what ROC measures?

Percentage increase or decrease in price over time Signup and view all the answers

What happens to ROC as a decline accelerates according to the text?

Moves deeper into negative territory Signup and view all the answers