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Trading with the Momentum Oscillator

Utility: Identifying the Trend

Standard Settings: 21, 63, 125, 250 Periods

The Momentum oscillator operates in a way similar to the Rate of Change (ROC) indicator.

 

The Momentum oscillator measures the difference between last price and the price of T periods ago. The result is a series that oscillates around a horizontal equilibrium line (zero line), this line represents the level at which the price is unchanged from its reading T periods ago. Momentum is very closely related to the, it will generate identical trading signals as the ROC.

Momentum Oscillator

 

Calculating the Momentum Oscillator

This is Momentum Oscillator Formula:

Momentum = Closing Price – Closing Price (T periods ago)

 

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Momentum Oscillator

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