What is SIROC Indicator?

The SIROC indicator is a technical analysis tool used to measure the momentum of a security’s price. It is a type of momentum indicator that helps traders identify the strength of a trend. The indicator provides valuable insights into the rate of change of a security’s price, enabling traders to make informed decisions.

Full Meaning

SIROC stands for Smoothed Index Rate Of Change. It is a combination of a MACD and an RSI or Stochastic, offering the smoothness of the MACD and the indexing of the RSI or Stochastic. This unique combination makes the indicator a powerful tool for traders.

Key Features of the SIROC Indicator

• Technical Analysis Tool: Firstly, traders use the indicator as a technical analysis tool to measure the momentum of a security’s price
• Momentum Indicator: It is a type of momentum indicator that helps traders identify the strength of a trend.
• Combination of MACD and RSI/Stochastic: The indicator is a combination of a MACD and an RSI or Stochastic, offering the smoothness of the MACD and the indexing of the RSI or Stochastic.
• Indexed Between 0-100: The indicator indexes values between 0-100, making it easier for traders to determine overbought and oversold zones.

Computation/Calculation

To calculate the SIROC indicator, traders take the rate of change of a security’s price and smooth it out over a certain period. As a result, the resulting value is then indexed between 0-100.

How it Appears on a Chart

The SIROC indicator appears on a chart as a line that oscillates between 0-100. Here is an example of the indicator:

Using the SIROC Indicator Alone

Traders add a supplementary Exponential Moving Average (EMA) line to the chart to generate trading signals. The EMA line identifies crossovers with the SIROC line, which traders use as trading signals. When the SIROC line crosses above the EMA line, it generates a bullish signal. Conversely, when the SIROC line crosses below the EMA line, it generates a bearish signal.

Using the Indicator with a Supplementary EMA Line

Traders add a supplementary Exponential Moving Average (EMA) line to the chart to generate trading signals. The EMA line identifies crossovers with the SIROC line, which traders use as trading signals. When the SIROC line crosses above the EMA line, it generates a bullish signal. Conversely, when the SIROC line crosses below the EMA line, it generates a bearish signal.

Conclusion

In conclusion, the SIROC indicator is a powerful tool for traders, offering a smoothed and indexed measure of a security’s price momentum. The indicator can be used alone to identify overbought and oversold zones or with a supplementary EMA line to generate trading signals. By using the indicator, traders can make informed decisions and improve their trading results.