Momentum measures the velocity of price changes instead of the actual price levels themselves. Momentum is measured by continually taking price differences for a fixed period.

The price momentum can be a basis for opening positions because periods of increasing prices attract buyers who put upward pressure on the price. And when the prices fall, sellers are attracted, and the additional sellers' pressure may push the price further down.

There are two types of methods for measuring the price momentum of an asset. They differ in terms of the bases for analyzing the current price momentum and the anticipation for it in the future.

Absolute momentum refers to the notion that market behavior is reflected in the asset's price through its relation with the price movements in the past. The absolute momentum compares the price momentum to itself; and
Relative momentum – a method in which individual asset price momentum is evaluated against other individual assets' price momentum.

Your momentum trading strategy will depend on the technical indicators, the candlestick patterns, or both. When defining a strategy, look for potential buy or sell signals through the respective crossover strategies.

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