PRINCIPLES_OF_MOMENTUM8 - PRINCIPLES OF MOMENTUM MOMENTUM...

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Unformatted text preview: PRINCIPLES OF MOMENTUM MOMENTUM IS ONE OF THE MOSTLY USED TECHNIQUES OF TECHNICAL ANALYSIS BUT THE LEAST UNDERSTOOD. MOMENTUM MEASURES VELOCITY OF A PRICE MOVE YOU CANNOY BUY AND SELL MOMENTUM, YOU CAN ONLY BUY AND SELL THE PRICE E 5 MOMENTUM PRINCIPLES TO BE COVERED TODAY ARE : 1. OVERBOUGHT/OVERSOLD 1. DIVERGENCES 1. TRENDLINE VIOLATIONS 1. PRICE PATTERN COMPLETION 1. MOVING AVERAGE SIGNAL BUY AND SELL SIGNALS CAN ONLY COME FROM A REVERSAL IN TREND OF THE ACTUAL PRICE, NOT A REVERSAL OF THE MOMENTUM SERIES. MOMENTUMS VALUABLE CONTRIBUTION IS TO TELL US WHEN THE UNDERLYING TECHNICAL STRUCTURE IS WEAKENING OR STRENGTHENING OVERBOUGHT/OVERSOLD WHEN AN OSCILLATOR TENDS TOWARD THE UPPER PART, IT IS SAID TO BE OVERBOUGHT. WHEN AN OSCILLATOR TENDS TOWARD THE LOWER PART, IT IS SAID TO BE OVERSOLDS.. LEVELS TO TAKE PROFITS OR REDUCE YOUR EXPOSURE News See Industry Analyst Estimates SEC Filings Broker Research Insiders OVERSOLD BOEING OVERBOUGHT OVERBOUGHT AND OVERSOLD LEVELS ARE OPPORTUNITY POINTS TO ANTICIPATE A TREND REVERSAL RISING PRICES, OPTIMISM AND SCREAMING NESWPAPER TITLES ARE INCENTIVES TO PURCHASE : THE OPPOSITE SHOULD BE DONE ! IT IS MORE FAVORABLE TO WAIT UNTIL THE OSCILLATOR HAS CROOSED THE UPPER BOUND A SECOND TIME Cisco WAIT TILL IT CROSSES AGAIN News See Industry Analyst Estimates SEC Filings Broker Research Insiders OVERSOLD BOEING OVERBOUGHT YOUR PURCHASE PRICE IS LOWER WHEN WAITING FOR THE SECONG CROSS OF THE LOWER BOUND...
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This note was uploaded on 04/14/2010 for the course FINANCE fnce 305 taught by Professor Proftujun during the Spring '10 term at Singapore Management.

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PRINCIPLES_OF_MOMENTUM8 - PRINCIPLES OF MOMENTUM MOMENTUM...

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