PriceMomentum: A New Chart Type by TradingCenter

A PriceMomentum chart enhances a common price chart with a few important features such as the intraday momentum and market volatility, to provide the opportunity for exceptional chart analysis.

Introducing the PriceMomentum Chart for the first time

PriceMomentum is created by G. Protonotarios to offer a new perspective to chart analysis. This chart type emphasizes percentage changes, rather than the price itself. In addition, it incorporates an algorithm that is designed to include market volatility and the shifts of the periodic momentum. It summarizes three main elements:

-Periodic Percentage change (%)

-Bullish/Bearish Periodic Momentum

-Volatility (as expressed  by the daily range, from high to low)

Basic Features:

• Focusing on percentage gains/loss, by ignoring the price itself
• A PriceMomentum chart is closer to a logarithmic chart rather than a common price chart
• It combines price action with intraday momentum and volatility, and that makes it more precise than any other chart near market tops/bottoms
• It is very sensitive to key shifts in the market momentum, especially if these shifts are characterized by significant volatility (something common near market tops/bottoms)
• Technical analysis formations and chart patterns are fully applicable on a PriceMomentum chart
• Moving averages are fully applicable too

Usage:

• Can be used in any asset class and in any timeframe, however, currently, it is used on the daily chart
• Ideal to analyze long-term trends in volatile markets where the common price chart is incapable of describing price action
• Ideal to project the activity of market speculation on a long-term basis
• It can identify the exhaustion of key trends, long before they can be identified on a simple price chart
• It is designed to form market tops/bottoms before they are formed on a common price or logarithmic chart. This is due to the fact that incorporates price momentum which changes before the market creates a key top/bottom
• It can identify historical areas of key support and resistance, draw perfect trendlines, and spot the existence of significant channels (as in the case of EURUSD)

 

 

Examples of the PriceMomentum on EURSD, Bitcoin, and Gold

These are the first PriceMomentum charts ever published on the internet.

 

PriceMomentum on EURUSD

Starting by applying the PriceMomentum chart on the most liquid asset in the world, the Eurodollar exchange rate.

Chart: EUR/USD PriceMomentum chart

-You can see a perfect descending triangle that is formed throughout the past 18 years (2004-2021).

-Each time the exchange rate touches the upper or the lower trendline of the channel, the trend is reversing in an emphatic way.

 

PriceMomentum on Bitcoin (BTC/USD)

The PriceMomentum chart is ideal for analyzing volatile markets such as the cryptocurrency and Bitcoin markets.

Chart: Bitcoin/USD PriceMomentum chart

As you can see the PriceMomentum chart recognizes the phase of the Bitcoin market at a glance, based on a simple SMA(100):

□ Above the SMA(100) on the daily chart, the market is long-term bullish

□ Below the SMA(100) on the daily chart, the market is long-term bearish

As simple as that. It is also very interesting that the PriceMomentum chart of Bitcoin has formed a new all-time-high long before the price chart forms its new all-time-high, by breaking $20,000. Another proof that price momentum moves long before the price itself.

 

PriceMomentum on the Price of Gold (XAU/USD)

The PriceMomentum chart of Gold against the US Dollar.

Chart: Gold/USD PriceMomentum chart

It is very interesting that the price chart of Gold formed a new all-time-high in 2020, but the PriceMomentum chart did not. The price grew to reach a record-high, but the momentum identified a significant weakness in breaking the previous all-time high of 2012. This lack of market momentum maybe explains the incapability of the Gold price to sustain the new all-time-high for more than a few months.

 

Stay tuned, more to come by TradingCenter.org.

 

■ PriceMomentum: A New Chart Type by TradingCenter

Giorgos Protonotarios, Financial Analyst

for TradingCenter.org (c)

29th of April 2021