Dynamic Momentum Index (DMI) is one of forex technical indicator used in forex technical analysis by many traders. Dynamic Momentum Index (DMI) is very similar to the relative strength index (RSI).

Dynamic Momentum Index (DMI) determines overbought and oversold conditions of a particular asset. This Indicator similar to RSI. The main difference between the two is that the RSI uses a fixed number of time periods (usually 14), while the dynamic momentum index uses different time periods as volatility changes.

The inconstancy of the DMI time periods is restricted by the recent inconstancy of currency trading prices. The DMI is more sensitive to price changes when Forex prices are inconstant. When there are no fluctuations on Forex market, the DMI uses a greater number of time periods.

This indicator is interpreted in the same manner as the RSI where readings below 30 are deemed to be oversold and levels over 70 are deemed to be overbought.

During more active Forex trading markets while a smaller number of time periods are being used. Thus, the DMI depends on fluctuations more in the Forex market and demonstrates changes more quickly than the RSI.