Trading & Charts

Momentum

The tendency of a price trend to keep going in the same direction for a while.

Momentum is the observation that stocks in motion tend to stay in motion, up or down, until something changes. Traders measure it with tools like moving averages and RSI. It is useful context, not a guarantee, and chasing momentum after a big move is how many traders buy the top.

For example

A stock making higher highs on strong volume has upward momentum. When that volume dries up, the momentum may be fading.

Related terms

Moving AverageRSI (Relative Strength Index)Volume

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