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Momentum And Strength Of Trends

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The technical indicator momentum showcases the rate of change. This rate of change shows the closing price of today's market and the closing price of a specific period of time "N." The difference between the two is the 'momentum.' Each day the ROC or momentum changes due to the changing market closing price.

Momentum is used to establish various trends. For example, if the momentum (rate of change) is continuously positive it means that a trend is sustained and negative, sustained. Many use this chart indicator to analyze when to buy or sell. For example, many market analysts say when it crosses through zero, then it's time to buy and vice versa, time to sell. The trend's strength is determined by how high or low the plotting points are.


This momentum method shows the absolute change taking into account no factors of why this is occurring. Percentages are analyzed over "N" period of time in proportional ways. The crossings are mapped and analyzed so when to buy and/or sell securities or stocks to ensure satisfaction within one's market decisions. The rate of change is mapped with a central line, while the lower half of the chart showcases the difference in the closing prices of the days plotted.

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