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Lesson 7.8 – Momentum Examples – Apple
Subtitles:
Just like we incorporate multiple time frames to help identify trends just like we incorporate multiple time frames using our trend lines we want to do the exact same thing when it comes to momentum one of my favourite examples is actually apple in 2009 through 2012. this was an epic top and shares of apple that started a pretty substantial decline temporary but it declined nonetheless you have a beautiful uptrend from the lows in early 2009 touched again in 2011 and then the trend line broke but what happened prior to this trend line breaking we had a bearish momentum divergence so now we’re looking at a weekly chart of apple showing a bearish momentum divergence a heads up that something’s wrong then we go to the daily time frame we start with the top and work our way down so we have a bearish divergence on the weekly time frame and now we turn our attention to the daily time frame and sure enough on the new high in the second half of 2012 momentum is putting in a lower high and then getting oversold all bearish characteristics these are things we see in downtrends in in markets that are heading lower not in strong up-trends so we want to bring it all together here by now incorporating that relative strength we’re looking at a ratio chart of apple compared to the S&P 500 so we had a bearish momentum divergence on the weekly a bearish momentum divergence on the daily and now when you compare apple to the rest of the market once again in the second half of 2012 we have a bearish divergence in apple relative to the S&P 500 higher highs in the ratio lower highs in momentum quickly oversold these are characteristics of downtrend so if you caught the weekly you caught the daily and then you looked at the relative strength ratio you had three things telling you the exact same outcome would occur get out of the market so when it comes to weighing the evidence and incorporating multiple time frames when it comes to momentum we want to do the same thing.
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Momentum Trading Investopedia, Investopedia Academy – Technical Analysis – Lesson 7.8 – Momentum Examples – Apple.
Popular Momentum indications
Momentum investors aren’t necessarily stressed over the basics of the hidden possession– such as its lasting development potential customers as well as the economic scenarios bordering it. All Momentum Trading investor generally cares about is price activity. This is why most Momentum investors count heavily on technological evaluation as well as indications to identify when to get in as well as leave each profession.
Popular Momentum indications consist of:
The Momentum sign
The Closely Equal strength index (RSI).
Relocating standards.
The stochastic oscillator.
Momentum trading summarized.
- Momentum trading is the practise of acquiring as well as offering properties according to the current strength of price trends.
- They will open a placement to take advantage of an expected price modification as well as shut the position when the trend starts to shed its strength.
- Momentum trading is based upon Volume, volatility as well as time frames.
- Momentum trading works by allowing investors to identify the price of modification in a possession’s price or Volume. As neither price or Volume will proceed in one direction forever, Momentum is normally taken an oscillating procedure.
Momentum investors focus on price activity rather than lasting development as well as basics. - Popular indications for Momentum trading consist of the Momentum sign, the RSI, MAs as well as the stochastic oscillator.
Read Users info Top Searched Momentum Trading Investopedia and Financial market information, evaluation, trading signals as well as Foreign exchange financial expert testimonials.
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