How to Trade with Momentum Indicator/What is momentum Indicator

Momentum indicator trading strategy

The Momentum technical indicator measures the amount that an asset’s price has changed over a given period of time. The indicator’s formula compares the most recent closing price to a previous closing price. If Momentum reaches extremely high or low values (relative to its historical values), the odds are that the current uptrend/down will continue. Extreme levels of the indicator mean that there’s enough momentum behind a trend to keep the price going.

Even though Momentum is an useful tool by itself, it’s better to use it in combination with other instruments. Let’s see the example of a trading strategy – Momentum and RSI combination. It’s better to use H4 timeframe for that.

✅First, notice the moment when Momentum crosses the 100 level to the upside.
✅At the same time, RSI should cross the 50 level to the upside.
✅Next, see how a Bullish candlestick confirms the entry.
✅So, it’s time to open a long position. Don’t forget to set Stop Loss 60 points below the entry.
✅Finally, your target is the previous important resistance level. Set Take profit there.

🕊We hope that the indicator will help you to gain the maximum profit!

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