What does the 100 line represent?

The 100 line (or 0 line in some versions) represents no change. Price crossing above 100 signals increasing bullish momentum.

Is momentum a leading indicator?

It can be leading because it often peaks before the actual price peaks, signaling that the trend is losing strength.

How many periods should I use?

A 10-period or 14-period setting is standard for most day and swing traders.

Does momentum work in all markets?

Yes, it is universal, but it is particularly useful in volatile markets like crypto and forex.

Education · Indicators

Momentum: Measuring the speed of price.

Momentum measures the rate of change in prices. It answers the question: is the market accelerating or slowing down?

The zero line crossover.

A basic strategy is to buy when the momentum line crosses above the 100 level and sell when it crosses below.

This works best when used in conjunction with a trend-following indicator like a 50-day EMA.

Divergence and Exhaustion.

Bullish Divergence: Price makes a new low, but Momentum makes a higher low.
Bearish Divergence: Price makes a new high, but Momentum makes a lower high.
Look for extreme spikes to identify market 'exhaustion' points.
Momentum often leads price at major turning points.

Why it matters.

In physics and finance, speed changes before direction does. By tracking the velocity of price, you can see the trend weakening before the first red candle appears.

FAQ

Questions fréquentes.

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Confirm the trend.

Relative strength.

The big picture.

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