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Technical Analysis Explained, Fifth Edition: The Successful Investor's Guide to Spotting Investment Trends and Turning Points, 5th Edition by Martin J. Pring

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13 MOMENTUM I: BASIC PRINCIPLES

The methods of trend determination considered so far have been concerned with analysis of the movement of the price itself through trendlines, price patterns, and moving-average (MA) analysis. These techniques are extremely useful, but they identify a change in trend only after it has taken place. The use of momentum indicators can warn of latent strengths or weaknesses in the indicator or price being monitored, often well ahead of the final turning point.

This chapter will examine the general principles of momentum interpretation that apply in some degree or another to all such oscillator type indicators. Rate of change will be used as a case study. The subsequent two chapters will discuss other specific momentum ...

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