Momentum indicator formula and settings
Momentum indicator formula and settings

Momentum indicator is the simplest trend-based indicator, a technical analysis tool.

Momentum indicates a change in the price of a trading instrument for a certain period of time. It can be applied as:

Oscillator, following the trend, similar to Moving Average Convergence/Divergence MACD. In this case, a trader gets a signal to buy if Momentum indicator falls and then goes upwards. A trader is supposed to sell, when Momentum indicator peaks and then goes downwards. To determine reversals of Momentum indicator more precisely, its short moving average can be used. Particularly high or low values of the indicator suggest that the trend will persist. If Momentum indicator hits very high values and then turns downwards, the price is likely to keep rising. However, a trader should take his/her time to open or close a position until the price confirms the signal.

Leading indicator. This way of use rests on the assumption that a sudden hike in the price is a precursor to an end of a bullish trend (as everyone believes it is to continue), while a sudden tumble bodes ill for a bearish trend (as everyone tries to quit the market). Basically, these two scenarios take place, yet such generalization is too wide. Once the market has closed in to its peak, Momentum shoots up. Then, it starts diving as the prices keep growing or stay flat. If the market has bottomed out, Momentum indicator sags only to reverse upwards long before the prices start to rise. In both cases, there is a gap between Momentum and the price levels.

momentum indicator


Momentum = CLOSE(i)/CLOSE(i-N)*100

CLOSE(i) – current bar’s closing price,

CLOSE(i-N) – closing price N bars earlier.

Take the first step towards your goal
Open account
Develop your trading skills without risking your money
Open demo account
Kind regards,
The InstaForex Analyst Team
GK InstaFintech © 2007-2024
Open account and get free training lessons!
Register account
Watch webinars
Download InstaForex training course
Learn forex trading with tutor
InstaForex workshops

Register account

If you are a newbie on Forex, you can open a demo account

Watch webinars

Forex webinar or interactive seminar is a modern and easily available way of learning how to trade Forex online. It is suitable for both novice and savvy investors

Watch webinars

Download InstaForex training course for beginners

Have you just started learning things about Forex? Don't miss our offer! Open a trading account and get the opportunity to download a ready-made training course created by InstaForex professional FX strategists

Download training course

Learn forex trading with tutor

The main training course includes 3 free lessons where our forex expert will tell you how to make accurate trading decisions and help you hone your practice skills

Learn more

InstaForex workshops

Register for workshops on topics which you are most interested in. They are available in online and offline formats. Our professional tutors will organize a thorough discussion of the chosen topics and will explain the most difficult things in a causal language

Learn more
Can't speak right now?
Ask your question in the chat.
Widget callback