## Definition of Momentum

Momentum is an oscillator indicator that compares the closing price of the current interval with the closing price of a set time period. In simple terms: it shows the speed and direction of price movements. It is placed below the price chart and is a single solid line.

Based on analysis of previous bars, Momentum can show likely trend reversal points. When it reaches maximum values, the indicator signals the possible continuation of a positive trend. When reaching its minimum value, it indicates that quotations are likely to continue moving downwards in the near future.

## How to calculate Momentum

The original formula for calculating the indicator:

Momentum = Close (i) - Close (i-n)

In the formula:

• Close (i) - The closing price of the last candlestick
• Close (i-n) is the closing price n periods ago
• n is the period of the Momentum indicator

The changed formula for calculating the indicator:

Momentum = Close / Close (i-n) * 100

## How to install and configure the Momentum indicator

The Momentum indicator can be found in the Indicators tab. When installed, it opens in a separate window below the chart. The following parameters can be changed in the indicator settings:

• Period – the default setting is 14
• Apply to – the suggested options can be applied to the calculation; the default setting is to apply to Close (closing price)
• Style – colour adjustment of the indicator line
• Fix a minimum and maximum – set the boundaries within which the indicator will move
• The level is often set at 100%. A movement of the indicator above the 100% level is a sign of an uptrend, while a movement below the level is a sign of a downtrend

## How to interpret Momentum indicator signals

• A buy signal. The indicator crosses the level of 100% from bottom to top, which indicates a probable continuation of the upward trend. Stop Loss is set for the nearest price minimum, and Take Profit is in ratio with Stop Loss 1:3 or after the indicator updates the local maximum
• Sell signal. The indicator crosses the 100% level downwards, indicating a likely continuation of the downtrend. Stop Loss is set for the nearest price maximum, and Take Profit is in the ratio with Stop Loss 1:3 or after the indicator updates the local minimum
• Divergence is the separation of price action from the indicator. The chart shows a new maximum or minimum value, but the indicator has not reached the previous maximum or minimum. A position is opened after the formation of the divergence in the opposite direction to the previous price movement