Momentum Further Resources Macro-economic charts See current charts and analysis of economic indicators, such as GDP, CPI, etc. Moore Historical Reports Chart books providing historical price analysis, seasonality and trading strategies for cattle, hogs and lumber. 1988 Click here to see entire catalog. Momentum indicators determine the latent strength or weakness of a trend as it progresses over time.
Momentum is highest at the beginning of a trend and lowest at trend turning points.
If momentum is trending strongly and prices are flat, it signals a potential change in price direction. To understand momentum, compare it to the force of gravity as you throw ball up in air, or the rebound force of the ball if you throw the ball and it hits the ceiling and bounces back faster. A caveat to these types of indicators is that one cannot describe the internal market structure because any data set chosen starts at arbitrary entrance point. A stochastic oscillator compares a closing price to the trading range over the last x-time periods. A trend reversal begins when prices cluster around the lows for an uptrending market, and cluster around the highs in a downtrending market.