12. Momentum Oscillators—Duration and Speed of a Trend
Momentum reveals the character of a trend. It is not an indicator about price or direction of price movement, but a measurement of its strength—and of how that strength increases or decreases during the trend’s life.
In all statistical analysis, the concept of exhaustion applies. This means that no trend continues indefinitely, and eventually, a trend will slow down, stop, or reverse. An analysis of price reveals direction and movement, but momentum is a separate attribute of price. It defines trends in terms of when or if those trends move into a range of overbought or oversold. These areas are measureable, and they occur when reversal is most likely. An overbought condition simply means ...
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