Momentum is a forex technical indicator used in technical analysis by many traders. Momentum is an indicator that calculates the amount of change in the price of a product within a certain instrument.

Momentum indicators movement often precedes price movement at the time of the change in direction of trend in the trade. Therefore, the Momentum indicator can be used as early indicators (leading indicators).

The use of momentum indicators is similar to the use of indicators Price Rate of Change (ROC). Both these indicators are equally indicated that the rate of change of a product price. However, the Price ROC indicator shows the percentage of price changes while the momentum indicator showing the ratio of price changes.

When the market is at its highest point, Momentum indicator will rise sharply and then dropped so that the direction of movement deviates from the price movement that still continues to rise. Likewise, if market is at its lowest, the Momentum indicator will drop sharply and then rise again precede price movement. Both conditions will cause the direction of movement of Momentum indicators deviate from the direction of price movements.

One of the advantages of this indicator is its ability to see possibilities in the future by providing an early signal for reducing the momentum that followed the end of the trends and changes in direction. Or in other words that is if the trend will end the momentum of the movement will be reduced until eventually penetrate the zero line which marks the end of trends and new trends will occur.

Other uses of this indicator is to determine the current market conditions such as overcrowding, selling or buying interest, which means an imminent change in the price. The price changes will not occur until the indicator leaving the area are selling or buying surplus interests (overbought / oversell).