Trading glossary
What is momentum in trading?
Momentum is the speed and strength of a price move, seen in candle size, closes and how far each swing travels.
Strong momentum shows as large candles closing near their extremes and swings that travel further than the last. Fading momentum shows as smaller candles, longer wicks and swings that gain less ground.
Many patterns describe a change in momentum. Wedges, for example, show each push travelling a shorter distance.
How traders use it
- Compare the size of recent swings with earlier ones.
- Look at where candles close within their range.
- Use indicators like RSI as a second opinion, not a replacement for reading price.
Example
Over three days, a stock rises 4%, 3% and 0.5%, and the last candle closes in the middle of its range with a long upper wick. Price is still rising, but momentum is clearly slowing.
Frequently asked questions
How do you measure momentum?
From price itself, through candle size and swing length, or with indicators such as RSI, MACD or rate of change.
Does momentum predict direction?
It describes the current move. Fading momentum is a warning, not a forecast.
Related terms
Related patterns
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.