Let talk about MARKET MOMENTUM
Momentum refers to the rate at which the price of a currency pair is changing over time. Many text books talk about how you can measure momentum of the market using indicator such as RSI and MA,but how can you observe it using naked chart?👇👇
Momentum refers to the rate at which the price of a currency pair is changing over time. Many text books talk about how you can measure momentum of the market using indicator such as RSI and MA,but how can you observe it using naked chart?👇👇
Before dwelling into this we have to understand what are the important areas to observe when price is moving,in a certain direction
1)External liquidity
This is a major swing where price started a movement
2)Internal liquidity
Swing points within a range
1)External liquidity
This is a major swing where price started a movement
2)Internal liquidity
Swing points within a range
Momentum of a market always move from external liquidity to internal liquidity and viceversa
One major thing to observe the pressure of a momentum is how the market reacts when reaches a certain swing point in a specific timeframe
One major thing to observe the pressure of a momentum is how the market reacts when reaches a certain swing point in a specific timeframe
Closing above/below the swing point indicates the continuation that mean there is high momentum of price/strong orders to push the price in that specific direction at that timeframe and viceversa is true
In conclution,reaction of a price at a swing point will determine its momentum,if it reaction affect the lower timeframes there is where we start to frame an entry either reversal or continuation entry
The way price flows resembles the newtons law of motion which state that "to every action there is equal and opposite reaction"in forex we say to every impulsive move it follows with correction(liqudation)move
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