Momentum - MetaTrader 4 Script | Forex Indicator Download - MT4/MT5 Resources - MetaTrader 5 Resources
Momentum technical indicator measures the price change of a financial instrument over a given time frame.
There are basically two ways to use the momentum indicator:
As a trend following indicator, it is similar to the Moving Average Convergence/Divergence (MACD) indicator. In this case, if the momentum indicator forms a trough and starts to rise, a buy signal occurs; when the price reaches a peak and falls, a sell signal occurs. You may want to plot the indicator's short-term moving average to determine when it bottoms or tops. Extremely high or low momentum values indicate a continuation of the current trend. Therefore, if the indicator reaches extremely high values and then declines, further price increases are expected. In any case, a position should be opened or closed only after the price confirms the signal generated by the indicator.
as a leading indicator. This approach assumes that the final stages of an uptrend are typically accompanied by rapid price increases (when everyone expects prices to go higher), whereas the end of a bear market is characterized by rapid price declines (when everyone wants to exit). This happens a lot, but it's also a broad generalization. Momentum indicators jump sharply when the market is nearing a top. After that the price starts to fall while the price continues to rise or move horizontally. Similarly, at market bottoms, momentum drops sharply and then picks up long before prices begin to rise. Both situations can lead to divergence between the indicator and price.
Momentum is calculated as the ratio of today's price to the price n periods ago:
Momentum = Close(i) / Close(i - n) * 100
Where:
CLOSE (i) — the closing price of the current bar;
CLOSE (i - n) — the closing price n bars ago.
Technical specifications
A complete description of momentum can be found in the Technical Analysis: Momentum section
Attachment download
📎 momentum.mq4 (2.8 KB)
Source: MQL5 #7781
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