Price Confirmation

Confirmation is concerned with determining whether a price trend is continuing or coming to an end. One group of indicators uses measures based upon the movement of price itself to confirm the trend. Generally, these indicators are based upon the concept of momentum.

What Is Momentum?

Momentum deals with the rate at which prices are changing. For example, in an uptrend, prices are rising and the trend line slopes upward. Momentum measures how quickly the prices are rising, or how steeply the trend line is sloping. In high school calculus, you probably learned that the slope of a line is called the first derivative, and that the change in that slope is called the second derivative. Momentum is, thus, the second derivative of price action over some period.