There
are many different ways to define momentum. This article is dedicated to the
momentum candle. I will try to keep it as simple as possible.

Momo
= Momentum Candle.

Momo
simply defined, is a candle which is at least twice the size of the previous
candle. There are other elements to consider with momo but that is the basic criterion.Some
examples of momos can
be seen highlighted below:

The
green momo candles are the ones I would like to bring to your attention. You
will notice that the red candle preceding the first highlighted green momo is
also twice the size of its previous candle.
You will see why this would not be traded later.

It
is beneficial to compare momo to other momos in making trading decisions. Some
are clearly more powerful than others. The two green momo candles clearly had
more power than the red one.

Why is momo important?

The
momo candle shows a large movement in price beyond the previous candles range.
The greater the difference in size between the momo and the previous candle the
stronger the indication of where price is currently going. You will usually see
momo long before any (MA) Moving Average catches up with price. Sometimes MA’s
align with momo …