Momentum Accumulation

What is it:

The momentum accumulation tool is a simple chart that shows the difference between gaining and losing sessions over a period of 100 days. The indicator works by comparing the current day's close to the previous day's close showing either a build up or a release in the momentum of a security. The counter keeps an amount for 100 trading sessions, so if the current reading is at 34 then there have been 34 more gaining sessions than losing sessions.

How to use:

The accumulation of momentum can easily explain the trend of a security with a brief glance at a chart. Although the counter disregards the size of the gain or loss, consecutive up or down days can be just as important in measuring the strength of the crowd behind a certain trend. Investors can use this simple tool to quickly gauge the bearishness or bullishness behind a securities price movements. Because the chart tracks the trend of 100 days, the tool is most useful for analyzing patterns in the medium-term. Trades should not be made using the momentum accumulation indicator alone. Instead, pairing this tool with a reversal type indicator or a moving average might help with market timing. Contrarian traders might find this tool particularly useful when looking to bet against where the crowd has placed their money.

This tool is available for download at this link. The template has data for the WTI spot price and may be replaced with historical data from any security that can be found on Yahoo Finance.

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