Momentum - that the momentum has peaked at point B and is...

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Feeling the Momentum 10/09/00 Is the current trend ready to end? Momentum is a good indicator to use for spotting possible trend reversals. Security: BA Position: N/A Sportscasters often say that they can feel the "momentum" changing in a game and often the score reflects the momentum swings. Such a momentum exists in the market. Momentum in the market is a measure of the price change in a given period of time. Quite often, momentum is confirmed by subsequent price movement. As such, it can be used as a leading indicator. To recognize such a reversal, take a look at Boeing Company [BA]. Below in Figure 1, is a bar chart of BA with the trendlines and key points labelled. The 12-bar momentum indicator is in the lower part of the figure. Notice
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Unformatted text preview: that the momentum has peaked at point B and is declining while the prices are still making higher highs as shown by the trendline connecting points a, b and c. The momentum is signalling a possible reversal which can be seen by the reversal in the trend from A to B and B to C. On 10/3/00 the price had just fallen below the trendline for higher lows, marking the possible end of the current trend. If the price does not move well above the trend of higher lows today, the reversal signal of the momentum is confirmed by the price. Figure 1. Boeing Company [BA] shows signs of a reversal. Higher highs and higher lows are currently in an uptrend. However, the momentum indicator is showing signs that uptrend is ending....
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