How to read Momentum Indicator Trading Signals

Momentum indicator is oscillator indicator. Momentum indicator forex determines the speed of the current market trend by calculating the current closing price in n periods of time. For example, if want to find out how strong or weak market trend, we need to identify the highest and lowest historical prices and compare it with the current price. As a result, the range value of momentum indicator. The indicator value can be both positive and negative

Maximum positive value of the momentum indicator shows overbought market, and low negative value of the momentum oscillator indicator shows oversold market.

Momentum calculation formula
Momentum is determined as the difference between the current closing price of the bar and the closing price of the first taken in the certain period

Momentum = (W (i) / Z (in)) * 100, where
Z (i) - the current closing price bar
Z (in) - closing price previous n bars.

How to use Momentum oscillator indicator?
We can use Momentum oscillator indicator by drag the momentum indicator button from the navigator menu with the mouse. Or we can use Momentum oscillator indicator by using the "Insert" - "indicators" - "Oscillator" - "momentum"

How to read Momentum Indicator Trading Signals ?
- Bullish divergence or bearish convergence is the best signal indicator in the analysis and it shows the weakness of the current trend.
- If the momentum oscillator indicator is below the 100, the trend is bearish, and we should look for a buy position.
- If the momentum oscillator indicator is above the 100, the trend is bullish, and we should look for a sell position.
- When momentum oscillator indicator overbought - a signal to sell.
- When momentum oscillator indicator oversold - a signal to buy.
- Crossing the zero line - trend has changed in the opposite direction.