Momentum is the difference between the current price and the price X-time periods ago. The difference displayed in points is referred to as Momentum or Price Change.

Momentum is defined as the current close or settlement price minus the settlement price of X-periods ago, where X is defined by the first argument. The positive or negative price difference is plotted around the zero line. The second plot is the Y-period moving average of the momentum, where Y is defined by the second argument.

Is is most commonly used as an overbought/oversold indicator. When the indicator moves from positive to negative, the market direction is changing.

Definition of Studies Main Menu