A momentum indicator measures the rate of price movements to assess the strength of a trend in an asset. It helps traders identify whether the price is gaining or losing momentum. Common indicators include the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). The RSI ranges from 0 to 100, indicating whether an asset is overbought or oversold. A reading above 70 suggests overbought conditions, while a reading below 30 indicates oversold conditions.MACD examines the relationship between two moving averages of an asset’s price. When the MACD line crosses above the signal line, it is often seen as a bullish signal, while a crossing below indicates a bearish signal.Traders use these indicators to make informed decisions about entry and exit points. Momentum indicators can help identify potential reversals or continuation of price trends, assisting in risk management and improving trading strategies. Understanding how to interpret these indicators can enhance a trader’s ability to navigate the market effectively.