The Momentum Indicator measures the rate at which the price of a security changes. Traders often use it to identify potential price reversals or to confirm the strength of a particular trend. The indicator consists of the Momentum line, a Zero line, and Up and Down signals that may offer a broad look at the asset's directional movement.
Momentum: The line representing the rate of change in the asset's price.
Zero Line: This line serves as a baseline for evaluating momentum.
Up Signal: Represented by green arrows, these signals may suggest a potential increase in momentum.
Down Signal: Represented by red arrows, these signals may suggest a potential decrease in momentum.
Parameters:
Length: Initially set to 12, this parameter dictates the number of periods used in calculating the momentum. Adjusting the length can change the indicator's sensitivity.
Price: This parameter is adjustable, offering options such as Close, High, Low, Open, Volume, or VWAP. The default setting is 'Close,' which serves as the basis for the Momentum calculation.
Momentum Indicator subgraph on chart
*Please note that these observations are for informational purposes and should not be construed as financial advice.