The concept of technical analysis is playing an important role while making buying – selling decisions on the global forex market. To predict the movements of market prices is possible via various mathematical computations and technical chart readings. Those kinds of technical analysis are providing some information for buying – selling transactions to the traders for near future. One of them is momentum method. Momentum is an indicator that expresses the intensity as a percentage and direction of price changes in a given period of time. The specified time frame that occurred much earlier based on the closing at a time, present for the closing aim would be to find where.
The general formula of momentum analysis: Momentum = (The closing price of last day / the closing price of x days before) x 100
Momentum is used often short-term calculations. To take more positive results, it may be better to apply this method for 7 or 10 days. Of course, it will vary to apply your investment process. In order to decide the right time you are using the instrument backward, it will be useful to do tests. In cases where mobility is high in price, maturity extended, while the mobility decreases, the term can be shortened. Finally, you can observe the concept of momentum method is using for short term trading decisions, and it may be effective in many commodities or currency pairs.
- Date: 30 October 2016 Sun 23:48
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