Momentum
The simplest momentum reading — just the difference between the current price and the price n periods ago — showing whether price is accelerating up or down.
What the numbers mean
The single setting is how far back the comparison reaches: momentum is today's close minus the close that many bars ago. A 10-period setting on a daily chart compares against two weeks ago; longer settings smooth the line and reduce the number of zero crossings.
- 10 — about two weeks on a daily chart
- 14 — a slightly smoother version
- 100 — the zero line on platforms that plot it as a ratio rather than a difference
- Measured in price units, so it cannot be compared between securities
How it is used
Used as the simplest possible read on whether price is accelerating: above zero and rising means the advance is speeding up, above zero but falling means it is still up but decelerating.
- Above zero and rising → the advance is accelerating
- Above zero but falling → still up, but losing drive
- Zero crossings → price is back where it was n bars ago
How it relates to everything else
Momentum is the raw material every other oscillator refines. RSI scales it to 0–100, ROC expresses it as a percentage, MACD smooths it with EMAs — and all of them were invented to fix momentum's two weaknesses, its unbounded scale and its sensitivity to which old bar is dropping out of the window.
- ROC is this in percentage terms, which makes it comparable across securities
- RSI and MACD are smoothed, bounded descendants of the same idea
- Deceleration here often precedes a MACD signal cross
What to watch for
The value is in raw price units, so it cannot be compared across securities, and an old outlier dropping out of the comparison can swing the line with nothing happening today.