Understanding Rate of Change in Securities
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Questions and Answers

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?

    <p>100% decline</p> Signup and view all the answers

    Which oscillator measures the speed and change of price movements?

    <p>Relative Strength Index (RSI)</p> 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?

    <p>Top Swing Failure</p> Signup and view all the answers

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

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

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

    <p>Above 70</p> Signup and view all the answers

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

    <p>Below 30</p> Signup and view all the answers

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

    <p>Between 50-60</p> Signup and view all the answers

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

    <p>Identifiable extremes signaling overbought and oversold conditions</p> 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?

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

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

    <p>Current price with the price a few days ago</p> Signup and view all the answers

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

    <p>When the ROC remains positive</p> Signup and view all the answers

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

    <p>By experiencing an upward surge</p> Signup and view all the answers

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

    <p>An advance is accelerating</p> Signup and view all the answers

    Which of the following best describes what ROC measures?

    <p>Percentage increase or decrease in price over time</p> Signup and view all the answers

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

    <p>Moves deeper into negative territory</p> Signup and view all the answers

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