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Forex indicators What is Momentum Indicator?
avatar lily
Question by: lily - 05 Jun 2012, 03:27:23
What is Momentum Indicator?
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Answers (1)
avatar user 249
Answer by: mike - 05 Jun 2012, 11:17:00

An Indicator that measures the amount of the financial instrument's price change for a certain period of time is called the Momentum Technical Indicator. There are two main methods using the Momentum indicator, one of that is as a trend-following oscillator, similar to Moving Average Convergence/Divergence or MACD. A signal to buy occurs when the Momentum indicator forms a trough and starts its growth; a signal to buy occurs when the Momentum indicator reaches its peak and turns down. For a more exact calculation of the indicator`s reverse, its short moving average is used. The continuation of the current tendency is determined if the Momentum indicator has an either very high or very low values. If the indicator reaches high values and then turns down further, price growth is expected. But, in any case, do not hurry to open (close) position until the prices prove the indicator signal. 

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