What is Relative Strength Index (RSI)?

The Relative strength index was developed by J. Welles Wilder and is commonly referred to as Wilder’s RSI. The RSI 14 is the common setting for this indicator and it is used to show the relative strength of the current price to the past 14 periods.

What is Moving Average Convergence and Divergence (MACD)?

The MACD indicator is a trend and momentum indicator that uses a histogram, the MACD line and the signal line. It was developed by Gerald Appel in the late 70’s and is one of the simplest of indicators to use.The most common settings for the MACD are periods of 12, 26 and 9 days and it is one of the most widely used indicators when it comes to understanding momentum changes in price.The MACD oscillator moves around the zero-line signaling increasing and decreasing momentum. Besides the histogram, the MACD and the signal line crossovers also represent bullish and bearish signals.

What is Stochastics oscillator?

The Stochastics oscillator is another type of momentum indicator which was developed by George Lane in the mid 90’s. The Stochastics oscillator is used to show the level of the closing prices in relation to the high low range over a specified period of time.The Stochastics oscillator is different as it follows the speed or the rate of change of price and as such it doesn’t follow price or volume. The Stochastics oscillator is made up of two lines known as the K and the D.

Relative Strength Index (RSI) and Other Momentum Indicators

Q: Types of Momentum Indicators

- Relative Strength Index (RSI) - Moving Average Convergence Divergence (MACD) - Stochastics Oscillator - Rate of Change (ROC) - Williams Percent Rage (%R) - Commodity Channel Index (CCI)

Momentum in the financial markets is defined as the tendency for prices to continue moving in the same direction.Increasing momentum in an uptrend signals the potential for prices to continue rising while in a downtrend, increasing momentum signals the potential for prices to continue falling. Momentum shows the force of buying or selling pressure and is used to measure how strong the trend will be.Momentum based indicators are key elements in understanding price action trends. It is a commonly known fact that momentum leads price, meaning that new highs in the momentum can often predict new highs in prices and vice versa on the downside.A change in momentum is generally followed by a change in price direction, which could be a correction or a trend reversal itself.

Types of Momentum Indicators

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Relative Strength Index (RSI) and Other Momentum Indicators

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Types of Momentum Indicators

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