Momentum
Momentum
The Momentum Technical Indicator measures the amount that a security's price has changed over a given time span:
- As oscillator, following the trend. When the indicator bottoms and turns up it is recommended to buy. When the indicator tops and turns down it is better to sell. Extremely high or low values of Momentum is a sign of the continuation of the current tendency. The downward turn following extreme values shows the continuation of the price growth.
- As a leading oscillator, based on an assumption that an increasing trend usually ends with a rapid price increase, while decreasing trends ends with a rapid price decline.
As a market tops, the Momentum indicator will climb sharply and then fall off resulting in divergences between the indicator and prices.
Calculation:
Momentum is calculated as a ratio of today's price to the price N periods ago:
MOMENTUM = CLOSE (i) / CLOSE (i - n) * 100
Where:
CLOSE (i) - current bar closing price;
CLOSE (i - n) - closing bar price N periods ago.
Similar information about indicators you can find in information system of trade platform MetaTrader 4 (Help-> Help Topics [F1] -> Ananlitics -> Technical Indicators).
