what is market momentum ?

Market momentum often called as market sentiment is the perceived strength of a positive or negative change in market prices. Means momentum looks deep into the tendency for rising market prices to rise further, and falling prices to keep falling. For example, we already saw that stock performed well in past, continue to do so in future.
Market momentum is a function of a price change during a specific period of time versus the trading volume during that period.
It measures the feeling or tone of a market, or its crowd psychology, as revealed through the activity and price movement of the securities traded in that market.
If the price change is large in the small amount of time then it indicators underlying high demand or bullishness in the market but these type of price most of the time not sustainable and falls immediately. But on another hand if the large price rises seen over large time frame then it indicates strong hands buying the market and most of the time it sustains for the long term.
Rising prices would indicate a bullish market sentiment due to underlying demand while falling prices would indicate a bearish market sentiment, they may happen due to lack of demand or passiveness towards investment.
High trading volume increases the market momentum of a price change and vice versa. High volume means higher demand and which pushed prices rapidly and firmly. That why it is important to understand that momentum considers not only changes in price level but also volume.
These Market momentum and volume changes can be tracked with the help of various types of charts. We can plot prices and volumes as well as price and volume derived indicators on the chart and predict the future trend of prices. The pre-emptive indicator gives a signal in advance of other market action. Momentum indicators such as RSI or stochastics are anticipatory indicators that technical analysts believe can be used to predict changes in price.

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Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
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