It measures the amount that a security’s price has changed over a given time period. It can be used as a trend-following oscillator similar to the MACD and as a leading indicator. Buy when the indicator bottoms and turns up and sell when the indicator peaks and turns down. If the Momentum indicator reaches extremely high or
low values, you should assume a continuation of the current trend. This method assumes that market tops are typically identified by a rapid price increase (when everyone expects prices to go higher) and that market bottoms typically end with rapid price declines (when everyone wants to get out).
Calculation of Momentum Oscillator
MOMENTUM = CLOSE(i)/CLOSE(i-N)*100
CLOSE(i): the closing price of the current bar
CLOSE(i-N): the closing bar price N periods ago