Momentum

Momentum provides an analysis of changes in futures prices (as opposed to changes in price levels). Changes in the rate of ascent or descent are plotted. The Momentum line is graphed positive or negative to a straight line representing time. The position of the time- line is determined by price at the beginning of the Momentum period. Commodity Traders use this analysis to determine overbought and oversold conditions in a futures market. When a maximum positive point is reached, the commodity market is said to be overbought and a downward reaction is imminent. When a maximum negative point is reached, the market is said to be oversold and an upward reaction is indicated.

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