The momentum oscillator is the most basic of charting and analysis is to measure the price change between the current price and the price n periods ago. This oscillator is intended to measure the "speed" of price movement.
The construction is made from the theft to the closing price of today's closing price n periods ago. This value can be positive, negative or zero.
The formula is:
Momentum = Closing price today - closing price n periods
The main advantage of the momentum line is that anticipates changes in trends in prices. Therefore, if we have a series of rising prices and the line of momentum is also trending upward, but begins to fall, it shows a sign of deceleration that can prevent a shift in prices. This is known as divergence between the current market trend and the slowdown in the momentum line.
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