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Definition

A market indicator utilising price and volume statistics for predicting the strength or weakness of a current market and any overbought or oversold conditions, and to note turning points within the market. This indicator is calculated by taking a time series representing the change of today's price from some fixed number of days back in history. The theory here is that when a share is going up it tends to move in a trajectory like a tennis ball thrown into the air - before it reaches its highest point it begins to slow down. Momentum indicators attempt to measure that slowing down process. Momentum indicators are the only indicators that can give advance warning of the top or bottom of the market.

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