Market Momentum

Market momentum is the capacity of a specific market to sustain an ongoing rise or fall in price over a predetermined period of time. In essence, a market trend is produced by market momentum. Since changes in an asset’s market price are what cause changes in the market momentum, it also indicates how the market is feeling right now.

In order to help traders find trading opportunities, technical analysis (TA) can make use of market momentum. These possibilities may present themselves during reversal points, bullish or bearish trends (when market momentum is increasing), or both (when market momentum is getting weaker).

Market momentum is correlated with both trade volume and price fluctuations, though. This means that a strong market trend and, consequently, a strong and more dependable market momentum are both indicated by considerable trading activity.

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