Term

Momentum

A Wealth of Knowledge

Momentum is a term used to describe whether a trend has enough driving force in its direction or whether it has become exhausted. Momentum indicators can be used to shed light on idea that a trend is exhausted. MACD and RSI are good momentum indicators amongst the bunch. When a trend looses momentum to the up side, we could see divergence between price action and momentum indicator and convergence in a downtrend between price action and momentum indicator. Elliot wave theorist would mostly see this difference between wave 3 and wave 5.

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