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Key Takeaways

Difficulty:Beginner
Reliability:Moderate
Category:momentum
Timeframes:1H, 4H, Daily

Momentum Indicator

momentumšŸ“Š 1H, 4H, Daily

Measures the rate of price change by comparing current price to price n periods ago.

Formula

Code
Momentum = Close - Close(n periods ago)
ROC = ((Close - Close(n)) / Close(n)) Ɨ 100

Detailed Explanation

The Momentum indicator is one of the simplest technical indicators, measuring the rate of price change.

**Two Forms:** 1. **Momentum**: Absolute difference (Close - Close[n]) 2. **Rate of Change (ROC)**: Percentage difference

**Usage:** - Rising momentum confirms uptrend strength - Falling momentum warns of potential reversal - Zero-line crossovers signal trend changes

Parameters

Period
Default: 10
Lookback period

šŸ“ˆ Bullish Signals

Momentum crosses above zero, rising momentum in uptrend

šŸ“‰ Bearish Signals

Momentum crosses below zero, falling momentum in downtrend

Python Implementation

Momentum and ROC calculation

Python
import pandas_ta as ta
df['Momentum'] = ta.mom(df['close'], length=10)
df['ROC'] = ta.roc(df['close'], length=10)

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("Momentum")
mom = ta.mom(close, 10)
plot(mom, "Momentum", color=color.blue)
hline(0, "Zero Line")
šŸ“Š Use TradingView for Advanced Charting
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MT5 MQL5 Code

C++
int mom_handle = iMomentum(_Symbol, _Period, 10, PRICE_CLOSE);
double mom[];
CopyBuffer(mom_handle, 0, 0, 3, mom);

Python Libraries

pandas-ta
Technical analysis
pip install pandas-ta

Common Mistakes

āœ—Using momentum alone without trend context
āœ—Ignoring divergences

Confirmation Signals

Price action
Volume
Trend indicators

Best For

Trend confirmationDivergence tradingRate of change analysis

šŸ’” Pro Tips

  • ā€¢Simple but effective indicator
  • ā€¢Divergences are reliable reversal signals
  • ā€¢Often used as confirmation for other indicators
Last updated: December 29, 2024

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

Learn More

Investopedia - Technical IndicatorsBabyPips - Technical IndicatorsMetaTrader 5 Docs

Frequently Asked Questions

Related Indicators

MACD (Moving Average Convergence Divergence)

MACD shows the relationship between two EMAs. Consists of MACD line, signal line, and histogram.

Relative Strength Index (RSI)

RSI measures the speed and magnitude of price changes, oscillating between 0-100 to identify overbought and oversold conditions.

Rate of Change (ROC)

Measures the percentage change in price over a specified period.

Back to All Indicators