Consider one more indicator: now it will be an indicator that determines the rate of price change in the market, its rate of growth or decline. If you have read about Charles Schwab already – you may have come to the same conclusion. It belongs to the most important indicators of a trend change and his name is Momentum. More Charles Dow wrote that first in the market include insiders, when no one else has no idea about what has already started turning, and then includes professionals (in this moment is the maximum change in the rate of growth or fall in the price) and when the trend already a spent – is the bulk of inexperienced traders. Goop will not settle for partial explanations. It was at this point, the rate of price change has already dropped to a minimum and the trend is getting ready to rest. Momentum help in time to get out of the final trend and avoid the late entry and headache. 'What's my name do you want? " Divergence in the name of the show. Long before the price reaches its peak, the momentum of this peak is to be held at the maximum price he has already shown the value below and forms a divergence from price, indicating a possible reversal. Those eggs are present only in profile for the low price.
We must recognize the fact that sometimes no divergence is not formed, and a reversal occurs. That is for such cases need additional other indicators. However, in the seventh repeat, endlessly increasing the number of indicators can not reduce the number of degrees of freedom and there is an overload of information the brain.