In this situation, trend breaks in momentum can be useful in place of first three basic events. To date, we have seen that momentum has made declining peaks as the market continued higher. There have been several zero line crossings, but again, the trend is still up so no short positions should have been taken. Conclusion Momentum is a very useful leading indicator but it must be used as an opportunity finding tool, not the final decision making tool. Confirm all signals with trend breaks and other technical signals, such as reversal patterns on bar charts.
Momentum is calculated by taking the current price and subtracting the price n-periods ago.
It is very similar to the Rate of Change indicator calculation.