MOM - Momentum
The Momentum indicator compares the current price in relation to where the price was in the past. Hence, Momentum is a measurement of the acceleration and deceleration of prices i.e., indicating if the prices are increasing at an increasing rate or decreasing at a decreasing rate.
Momentum (MOM) = Current Price – Previous n period Price
If the current price is higher than the price in the past, then the Momentum indicator is positive indicating a bullish trend whereas when the current price is lower than the price in the past, then the Momentum indicator is negative suggesting bearish trend.
Momentum crossover of zero signals a trend reversal pointing to take a long position and vice versa for a short position.
Momentum is also used to identify divergence in prices indicating a possible trend reversal i.e. when MOM is moving in the opposite direction of the price but this may not be true all the time.
Momentum indicator with 20 period.