Linear Momentum and Performance Indicators By Akram El Sherbini

Linear Momentum and Performance Indicators By Akram El Sherbini, MFTA, CFTe, CETA

 “Momentum is not the same as velocity. A lot of words are used in physics, and they all have precise meanings in physics, although they may not have such precise meanings in everyday language. Momentum is an example, and we must define it precisely.” (Feynman, 1965). Since momentum indicators have been introduced to the field of technical analysis, many analysts use momentum when they refer to price acceleration. As the study of price movement is the main concern of technical analysts, the laws of motion, including Newton’s second law, are applied to prices to clarify the difference between price acceleration, momentum and force. This paper will attempt to adjust the price momentum and force concepts introduced by Welles Wilder and Alexander Elder, respectively. By introducing the concept of linear momentum, new indicators will emerge to dissect the market performance into six main elements: market’s force, pressure, strength, power, intensity, and dynamic strength. This will lead to a deeper insight about market action. The leading performance indicators can be used simultaneously to identify price turning points and filter irrelevant divergences. The linear momentum and the new performance indicators should make a significant change in categorizing several indicators in technical analysis.