Wednesday, November 15, 2006
Technical Indicators
Chande Momentum Indicator
Read More...The Chande Momentum Indicator is closely related to other indicators such as the Relative Strength Index. It differs from momentum indicators such as RSI and Stochastics by using information from both up and down days.
The usual method of interpreting the Chande Momentum Indicator is to look for overbought and oversold conditions. Generally the overbought level is at +50 and the oversold level at -50. These levels are approximate to the 70/30 levels on the Relative Strength Index. Either condition is a strong indicator of a change in the trend of buying/selling.
The CMI is also useful to spot trends, used in a similiar manner as the Vertical Horizontal Filter (VHF). The higher the Chande Momentum Indicator the stronger the trend. Buy when a long period CMI crosses above the short period moving average of the CMI. Sell at the converse...
The usual method of interpreting the Chande Momentum Indicator is to look for overbought and oversold conditions. Generally the overbought level is at +50 and the oversold level at -50. These levels are approximate to the 70/30 levels on the Relative Strength Index. Either condition is a strong indicator of a change in the trend of buying/selling.
The CMI is also useful to spot trends, used in a similiar manner as the Vertical Horizontal Filter (VHF). The higher the Chande Momentum Indicator the stronger the trend. Buy when a long period CMI crosses above the short period moving average of the CMI. Sell at the converse...
