Definition
The Momentum indicator compares the current price to the price n periods ago. Positive values indicate upward momentum; negative values indicate downward momentum. It helps identify the speed of price movement and potential trend reversals.
Formula
Momentum = Current Price - Price n periods ago
Example
If today's close is $55 and 10 days ago it was $50, momentum is +$5. Rising momentum confirms an uptrend; falling momentum may precede a reversal.
FAQ
What is Momentum Indicator?
A measure of the rate of price change over a specific period.
How do you calculate Momentum Indicator?
A common formula for Momentum Indicator is: Momentum = Current Price - Price n periods ago
Why is Momentum Indicator important?
Momentum Indicator helps investors evaluate technical analysis and make more informed decisions.