Momentum Indicators
Momentum indicators are tools used in technical analysis to measure the speed and strength of price movements in financial markets. They help traders identify potential trends and reversals by comparing current prices to past prices over a specific period. Common momentum indicators include the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD).
These indicators typically generate values that range between set limits, allowing traders to spot overbought or oversold conditions. When the momentum is strong, it may suggest that a trend will continue, while weakening momentum can indicate a potential change in direction.