Momentum Indicator

Indicator of the direction and rate of change in stock price movements.

The momentum is calculated as the difference between the current and previous price of a stock, divided by the previous price. It can be computed hourly, daily, weekly, or monthly. An interval of 10 days is typical.

In a diagram, the momentum of a stock is usually depicted as a curve that fluctuates around a zero line. If the curve crosses the zero line from below, this is understood as a signal to buy. If the momentum curve crosses the zero line from above, it is considered to be a signal to sell.

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