Trend and Momentum

Many technical indicators are trend-following systems that are used to confirm that a change in market direction has already taken place. For example, a moving average turns down after the market peaks because it averages in old prices with recent prices. Momentum indicators, however, are more predictive. They measure the speed of price movements, not the prices themselves.

Many technical indicators are trend-following systems that are used to confirm that a change in market direction has already taken place.

If determining the trend is the basic task of technical analysis, then determining its strength is the next step. The momentum of a trend can be measured, and its definition, when applied to the financial and commodities ...

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