Momentum

Momentum

Momentum indicator is used as a leading indicator that measures the rate of change in closing price and identifies the speed of price movement. It is also used as an oscillator that moves above and below zero. The indicator is displayed as a single line and can be found below the price bars (See the chart below).

The momentum can be of either positive or negative values. In a trending market, when the momentum indicator is above zero, the price has upwards momentum; when the momentum indicator is below zero, the price has downwards momentum. If the value of the momentum is high, the asset is considered overbought; if the value is low, the asset is considered oversold.

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