#TrendTradingStrategy The momentum indicator is a technical analysis tool used to measure the speed or strength of price movements of an asset over a specific period. This indicator helps traders identify whether a trend will continue or is likely to reverse. Common examples include:
- Relative Strength Index (RSI): Measures the speed and change of price movements on a scale of 0-100. A value above 70 indicates overbought conditions (possible decline), while below 30 indicates oversold (possible rise).
- Moving Average Convergence Divergence (MACD): Compares short-term and long-term moving averages to show momentum changes, with crossover signals indicating buy or sell.
- Stochastic Oscillator: Compares the last closing price with the price range over a specific period, indicating whether the asset is approaching overbought or oversold.
These indicators are often used together with other tools such as trend lines for trend confirmation and trading decision-making.