Momentum Indicator Expert Advisor Setup - Setting Up Momentum Indicator Expert Advisor
Momentum Indicator Expert Advisor Setup - Setting Up Momentum Indicator Expert Advisor - A trader can come up with an Momentum Indicator Expert Advisor based on the Momentum Indicator explained below.
Momentum Indicator Expert Advisor rules can be combined with other indicators to come up with other Expert Advisor Bots that trade using rules based on two or more indicators combined to form a trading system.
Momentum Analysis & Momentum Oscillator Signals
Momentum indicator uses math equations to calculate the line of plotting. Momentum measures the velocity with which price changes. This is calculated as the difference between the ruling price candlestick and the average price of a selected number of price bars ago.
Momentum represents the rate of change of the currency’s price over the particular time periods. The faster that prices rises, the larger the increase in the momentum. The faster that prices decline, the larger the decrease in the momentum.
As the price movement starts to slowdown the momentum also will slowdown & return to a median level.
Momentum Indicator - Momentum Indicator Expert Advisor Setup
Forex Analysis & Generating Signals
This indicator is used to generate technical buy and sell signals. The three most common methods of generating signals used in FX are:
Zero Centerline Forex Crossovers FX Trade Signals:
- A buy signal gets generated when Momentum crosses above zero
- A sell signal gets generated when Momentum crosses below zero
Overbought/Oversold Levels:
Momentum is used as an overbought/oversold indicator, to identify potential overbought and oversold levels based on previous readings: the previous high or low of the momentum is used to figure out the overbought and oversold levels.
- Readings above the overbought level mean the forex pair is overbought and a price correction is pending
- While readings below the oversold level the currency is oversold & a price rally is pending.
FX Trend Line Break Outs:
Trend lines can be drawn on the Momentum indicator connecting the peaks and troughs. Momentum begins to turn before price hence making it a leading indicator.
- Bullish reversal - Momentum readings breaking above a downwards trend-line warns of a possible bullish reversal signal while
- Bearish reversal - momentum readings breaking below an upward trend-line warns of a possible bearish reversal signal.
Analysis - Forex Momentum Indicator Expert Advisor Setup
