Master the "Rate of Change" tool. Learn how the Momentum indicator helps you gauge the velocity and acceleration of price moves to validate trend strength.
The Momentum indicator is a technical tool that measures the rate of change of an asset's price. Unlike other oscillators that are range-bound, the basic Momentum indicator compares the current price to the price from a specific number of periods ago. It answers the question: "How fast is the price moving, and is that speed accelerating or decelerating?"
Professional traders use the Momentum indicator to validate the strength of a price move. If the price breaks out to a new high, but the Momentum indicator fails to make a new high, this is a "lack of momentum" warning—often suggesting the trend is running out of steam.
They are different. RSI is range-bound and excels at finding reversals, whereas the Momentum indicator is unbounded and excels at showing the raw, unweighted speed of a trend.
The centerline represents the point where the current price equals the price from the specified period ago. A move above the centerline is generally considered bullish, and a move below is considered bearish.