Momentum

Stochastic Oscillator (Momentum)

Momentum indicator that compares the closing prices of an instrument to its price range over a specified period of time. Used to identify overbought and over sold conditions

$$ \%K = \left( \frac{\text{Closing Price} - \text{Lowest Low}}{\text{Highest High} - \text{Lowest Low}} \right) \times 100 $$

• %K is the current value of the Stochastic Oscillator.
• The "Closing Price" is the most recent closing price.
• "Lowest Low" is the lowest price over a specified period.
• "Highest High" is the highest price over the same specified period.

Signal Line

$$ \%D = \text{3-day Simple Moving Average of \%K} $$

• Buy Score Addition: Below 20 (Oversold)
• Sell Score Addition: Above 80 (Overbought)

Relative Strength Index (RSI) (Momentum)

A momentum oscillator that measures the speed and change of price movements. Relative Strength is the average gain divided y the average lose over a specified period usually 14.

$$ RSI = 100 - \left( \frac{100}{1 + RS} \right) $$

$$ \text{Where:} \quad RS = \frac{\text{Average Gain}}{\text{Average Loss}} $$

• Buy Score Addition: Below 30 (Oversold)
• Sell Score Addition: Above 70 (Overbought)