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Charting Made Simple: A Beginner's Guide to Technical Analysis by Roger Kinsky

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Chapter 7: Momentum

In this chapter I’ll look at momentum in the market and its significance to share trading. I’ll describe the momentum indicator as a way of measuring momentum and the advantages and limitations of this indicator.

Physical momentum

Momentum in the physical world stems from Newton’s first law of motion which states that a body will remain at rest or in uniform motion unless a force acts on it to change that state. If you place a book on a table the law implies that the book will stay there forever unless a force acts on it and causes it to move. On the other hand, a moving body will keep moving forever in the same way unless a force acts on it to speed it up, slow it down or stop it.

Sharemarket momentum

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