| Characteristic: |
Momentum Indicator |
| Parameter Defaults: |
Momentum Period |
12 |
controls the measurement period for momentum |
| Plots: |
Momentum |
The
Momentum Indicator is the most basic form of measurement of price
direction and velocity. It is an exceptionally simple formula that
merely represents price movement from the one bar to a bar "x" periods
prior.
Momentum = Pricet – Pricet-1
By
subtracting the price of (say) 12 periods ago from the current price it
will produce a number of points that will be above zero (if price is
now higher) or below zero (if price is now lower). From this we can
deduce:
| • |
Momentum below zero and moving lower |
– price is accelerating lower |
| • |
Momentum below zero but rising |
– price is generally moving lower but at a slower pace |
| • |
Momentum above zero and rising |
- price is accelerating higher |
| • |
Momentum above zero but declining |
- price is generally moving higher but at a slower pace |
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