The technical analysts implement various indicators in order to find the accurate intraday trading tips. Technical analysts combine two indicators together to grab better opportunities in the market. Tushar Chande developed a unique indicator, which bring together the features of candlestick analysis with the relative strength index. The traders use this technical indicator to gauge the right time to buy or sell the stocks. The indicator informs the traders about the relationship between stock open price and the closing price of the stock over certain period.
Intraday Momentum Index was developed by Tushar Chande. Well combination of the Relative Strength Index and Candlestick Analysis gives invention to the Intraday Momentum Index. In general, the IMI calculation is similar to RSI, but there lies a difference. Opening and closing prices relationships of intraday are used here in order to find out if the day is up or down. Here, the up day means that the close is higher than the open. This is signified by the white candlesticks. The down day means that the close is lower than the open and it is signified by black candlesticks.
The index rise over 70 indicates overbought conditions like RSI that mean lower prices in future. When the Index values lower than 30 then it mean a possibility of oversold situation that is followed by higher prices. One must estimate the forex market trendiness using all overbought/oversold indicators before taking any actions on signals. It is observed that the Intraday Momentum Index is the same formula as the Relative Strength Index except intraday differences are used as input. Simply you can understand that while the RSI uses the day-to-day change as input, the IMI uses the difference between the high and low values for the day. IMI was designed by Tushar Chande.
One and only parameter used with the IMI on StockFetcher is the period. Here the period is used within the RSI-based formula. In addition to this, the results from the IMI measure are scaled between 0 and 100. Intraday Momentum Index is an oscillator that is constructed by averaging n day’s worth of upward price changes to n day’s worth of downward price changes. The sell signals are issued when the index crosses above the overbought level of 70% and buy signals are issued buy signals are issued when the index crosses below the oversold level of 30%.
Usually, the Intraday Momentum Index takes one input parameter that is the number of periods used to construct the up and down price change averages.
For more information about this frequently used indicator, you must get in touch with the technical analysts. Money Classic Research leads the way in offering accurate calls to its clients. All the stock market tips generated by their team is a result of profound research and thorough knowledge.
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