Momentum and rate of change (ROC) are technical analysis indicators showing the difference between today's closing price and the close n days ago. Momentum is the absolute difference in stock prices, while ROC scales by the old close to represent the increase as a fraction. These indicators remain positive during an uptrend and negative during a downtrend. Crossing up through zero may signal a buy, while crossing down may signal a sell. The higher or lower the indicators, the stronger the trend. Momentum shows absolute changes in dollar terms, while ROC shows changes proportionally. Conventionally, momentum is used as a trend-following indicator, with descending momentum signaling a sell and ascending momentum signaling a buy.
Momentum and rate of change (ROC) are technical analysis indicators showing the difference between today's closing price and the close n days ago. Momentum is the absolute difference in stock prices, while ROC scales by the old close to represent the increase as a fraction. These indicators remain positive during an uptrend and negative during a downtrend. Crossing up through zero may signal a buy, while crossing down may signal a sell. The higher or lower the indicators, the stronger the trend. Momentum shows absolute changes in dollar terms, while ROC shows changes proportionally. Conventionally, momentum is used as a trend-following indicator, with descending momentum signaling a sell and ascending momentum signaling a buy.
Momentum and rate of change (ROC) are technical analysis indicators showing the difference between today's closing price and the close n days ago. Momentum is the absolute difference in stock prices, while ROC scales by the old close to represent the increase as a fraction. These indicators remain positive during an uptrend and negative during a downtrend. Crossing up through zero may signal a buy, while crossing down may signal a sell. The higher or lower the indicators, the stronger the trend. Momentum shows absolute changes in dollar terms, while ROC shows changes proportionally. Conventionally, momentum is used as a trend-following indicator, with descending momentum signaling a sell and ascending momentum signaling a buy.
Momentum and rate of change (ROC) are technical analysis indicators showing the difference between today's closing price and the close n days ago. Momentum is the absolute difference in stock prices, while ROC scales by the old close to represent the increase as a fraction. These indicators remain positive during an uptrend and negative during a downtrend. Crossing up through zero may signal a buy, while crossing down may signal a sell. The higher or lower the indicators, the stronger the trend. Momentum shows absolute changes in dollar terms, while ROC shows changes proportionally. Conventionally, momentum is used as a trend-following indicator, with descending momentum signaling a sell and ascending momentum signaling a buy.
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Momentum (technical analysis)
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Jump to: navigation, search For other uses of "Momentum", see Momentum (disambiguation). Momentum and rate of change (ROC) are simple technical analysis indicators shoing the difference !eteen today"s closing price and the close # days ago$ %omentum is the a!solute difference in stock, commodity: Rate of change scales !y the old close, so as to represent the increase as a fraction, "Momentum" in general refers to prices continuing to trend$ &he momentum and ROC indicators sho trend !y remaining positive hile an uptrend is sustained, or negative hile a dontrend is sustained$ ' crossing up through (ero may !e used as a signal to !uy, or a crossing don through (ero as a signal to sell$ )o high (or ho lo hen negative) the indicators get shos ho strong the trend is$ &he ay momentum shos an a!solute change means it shos for instance a *+ rise over ,- days, hereas ROC might sho that as -$,. for a ,./ rise over the same period$ One can choose !eteen looking at a move in dollar terms, relative point terms, or proportional terms$ &he (ero crossings are the same in each, of course, !ut the highs or los shoing strength are on the respective different !ases$ &he conventional interpretation is to use momentum as a trend0folloing indicator$ &his means that hen the indicator peaks and !egins to descend, it can !e considered a sell signal$ &he opposite conditions can !e interpreted hen the indicator !ottoms out and !egins to rise$ 123 SMA[edit] %omentum is the change in an #0day simple moving average (4%') !eteen yesterday and today, ith a scale factor #52, i$e$ &his is the slope or steepness of the 4%' line, like a derivative$ &his relationship is not much discussed generally, !ut it"s of interest in understanding the signals from the indicator$ When momentum crosses up through (ero it corresponds to a trough in the 4%', and hen it crosses don through (ero it"s a peak$ )o high (or lo) momentum gets represents ho steeply the 4%' is rising (or falling)$ &he &R67 indicator is similarly !ased on changes in a moving average (a triple e8ponential in that case)$