Momentum pure and simple is fine, but how
about the trend of momentum? Here’s what
it can tell you.
by Martin J. Pring
Momentum is a generic
term that applies to all
oscillators, and the
principles of momentum
interpretation can in
general be applied to all
oscillators in one way or
another. These interpretations are
susceptible to overbought/oversold
conditions, divergences, and so forth.
However, there is an even more useful
interpretive technique that can be applied to
momentum, and that is to analyze the actual
trend of the oscillator.
First, it is important to understand that
momentum, just like price, moves in trends.
This means that the trend-determining
techniques used in price trend analysis work
just as well with momentum trends. Even so,
we must bear in mind that a reversal in the
trend in momentum is usually, but not always,
associated with a similar reversal in the
price itself. Here are some trend-reversal
techniques that can help you get a better fix
on using momentum interpretation for