Momentum oscillator indicators

Momentum oscillators are used to measure the change in the speed of the market. They tend to oscillate above and below a centre line and move between overbought and oversold conditions. Momentum oscillators generally don’t lag price action as various trend following indicators do and are used to enter into and exit out of the swings in a sideways or trending market.

The relative strength index (RSI)

The most popular momentum oscillator is the relative strength index or RSI. It differs from many other oscillators in that it has upper and lower limits to which it may travel. The standard time input into the RSI is 14 periods, but it is quite often used with an input of seven time periods and in some trading methods two or three.