Momentum is an indicator to measure the velocity or speed of change in the price of a stock, by entering the data that has been happening to prices in a formula. The result of the calculation formula is then displayed in the form of a line in the box at the bottom of the charts. The box is called the Oscillator.
Oscillators separated by a horizontal line called Level 0 (zero) in the middle. On the Level 0 images are marked with red lines, commonly used to obtain signal traders sell and buy signals. If the lines cut into the top-line momentum 0 then expressed as a buy signal. While the line that cuts down momentum expressed as a signal to sell.
The area on the bottom of the oscillator is called the negative zone, while area on the top of the oscillator is called the positive zone. When the momentum line is far above the positive zone, it is called by the term overbought which is a bearish signal. Momentum line that is far below the oversold zone, which negative is called a bullish signal.
Momentum is the formula:
Multiply M = Cp - Cp (n-day)
Cp today is the last closing price
Cp (n-day) is the previous day's closing price n
(N-day) is the length of time periods used
From the formula it can be seen that the value line on the oscillator is obtained by taking the last closing price and closing price minus (n-day) previously. If the period used momentum tends to be 10 days (Momentum -10) then Cp (n-day) is the closing price 10 days ago.
If the final price (Cp today) is higher than Cp (n-day) it will get a positive value or indicate the price rises. Conversely when prices fall (minus value) then it will be seen as a line momentum in the negative zone in the oscillator. But before you line 0 itself must be determined in advance, using the difference in value last closing price with closing price 10 days ago.
From the way the calculation formula of this indicator, if the stock price is rising in an uptrend or accelerates the momentum of the line will also be increased or accelerated in an uptrend, so the line momentum will increase and be above the uptrend line 0 sign of gaining momentum. Conversely, if the stock price momentum is a downtrend then the line will be in the negative zone sign of a downtrend is gaining momentum.
In conclusion, the line momentum in the direction of stock price movement indicates the trend is gaining momentum. But if otherwise, the line of momentum in the opposite direction to the movement of stock prices, it could indicate a trend is losing momentum, meaning that the trend reversal is likely.
Oscillators separated by a horizontal line called Level 0 (zero) in the middle. On the Level 0 images are marked with red lines, commonly used to obtain signal traders sell and buy signals. If the lines cut into the top-line momentum 0 then expressed as a buy signal. While the line that cuts down momentum expressed as a signal to sell.
The area on the bottom of the oscillator is called the negative zone, while area on the top of the oscillator is called the positive zone. When the momentum line is far above the positive zone, it is called by the term overbought which is a bearish signal. Momentum line that is far below the oversold zone, which negative is called a bullish signal.
Momentum is the formula:
Multiply M = Cp - Cp (n-day)
Cp today is the last closing price
Cp (n-day) is the previous day's closing price n
(N-day) is the length of time periods used
From the formula it can be seen that the value line on the oscillator is obtained by taking the last closing price and closing price minus (n-day) previously. If the period used momentum tends to be 10 days (Momentum -10) then Cp (n-day) is the closing price 10 days ago.
If the final price (Cp today) is higher than Cp (n-day) it will get a positive value or indicate the price rises. Conversely when prices fall (minus value) then it will be seen as a line momentum in the negative zone in the oscillator. But before you line 0 itself must be determined in advance, using the difference in value last closing price with closing price 10 days ago.
From the way the calculation formula of this indicator, if the stock price is rising in an uptrend or accelerates the momentum of the line will also be increased or accelerated in an uptrend, so the line momentum will increase and be above the uptrend line 0 sign of gaining momentum. Conversely, if the stock price momentum is a downtrend then the line will be in the negative zone sign of a downtrend is gaining momentum.
In conclusion, the line momentum in the direction of stock price movement indicates the trend is gaining momentum. But if otherwise, the line of momentum in the opposite direction to the movement of stock prices, it could indicate a trend is losing momentum, meaning that the trend reversal is likely.
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