Momentum Oscillator: Technical Analysis Training

This is the 22th Day course in a series of 60-Days called “Technical Analysis Training”

You will get daily one series of this Training after 8 o’clock night (Dinner Finished)

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Momentum Oscillator

Effect of Momentum Oscillator

Momentum measures the amount that a financial instrument’s price has changed over a given timeframe. Momentum is significant because it signals the strength of price trends.The Momentum rises above 0 , a bullish noticeable  is cause. When the Momentum falls below 0, the Technical Analysis is a bearish signal.

Narration

Momentum measures the amount that a financial equipment price has changed over a given time frame  Momentum is important because it indicate the strength of price trends. A healthy price trend tends to show strong momentum, while decline trends generally have decreasing momentum indicating a trend reversal or correction. Momentum can also indicate short-term market excess referred to as overbought and oversold levels. A bullish signal is generated when the Momentum rises above 0 and a bearish signal is generated when the Momentum falls below 0.

Momentum is calculated as a ratio of today’s price compared to the price n periods ago. The formula is [Close/(Close n time-periods ago) times 100].

Trading Factor:

Momentum can be used as a trend-following oscillator similar to the MACD. A bullish indicate is achieved when the indicator bottoms and turns up.
A bearish signal is achieved when the indicator peaks and turns down.

If the Momentum indicator influence extremely higher low values (relative to its historical values),

a continuity of the current trend may be called for. For example, if the Momentum indicator reaches extremely high values and then turns down, one could predict prices will probably go still higher.In either case, only trade after prices confirm the signal generated by the indicator (e.g., if prices peak and turn down, wait for prices to begin to fall before selling).

The Momentum indicator can also be used as a leading indicator.This method assumes that market tops are typically identified by a rapid price increase (when everyone expects prices to go higher)and that market bottoms typically end with rapid price declines (when everyone wants to get out). As a market peaks, the Momentum indicator will climb sharply and then fall off–diverging from the continued upward or sideways movement of the price.

Similarly, at a market bottom, the Momentum indicator will drop sharply and then begin to climb well ahead of prices.Both of these situations result in divergences between the indicator and prices.

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