Click to learn more. The ongoing plot forms an oscillator that moves above and below 100. Bullish and bearish interpretations are found by looking for divergences, centerline crossovers and extreme readings.
Momentum can also refer to a particular investing or trading style.
The rational is that the hot get hotter and the cold get colder. Bullish momentum players buy securities that are popular or that they believe will become popular. As the word spreads and popularity grows, the advance will accelerate. Price acceleration is the same as an increase in momentum.