Glossary · Trading basics

Momentum

The speed and persistence of a price move — how strongly price is pushing in one direction right now.

By Sky Trade editorial teamUpdated November 5, 2026

Momentum describes not just where price is going but how forcefully. A run of large candles closing near their extremes shows strong momentum; small, overlapping candles show it fading.

Traders measure it in two ways. Visually, through candle size and patterns such as three white soldiers. Numerically, with oscillators such as Momentum, ROC or RSI, which compare the current price with past prices.

Two opposite mistakes are common. One is chasing: jumping in after a strong burst on the assumption it will continue, just as it runs out of steam. The other is fading every strong move because it “looks overextended” — strong momentum can persist far longer than feels comfortable, and it can also stop abruptly. A sensible middle path is to treat slowing momentum (smaller candles, a flattening oscillator, a divergence) as a warning, not as a reversal signal on its own.

On OTC instruments bursts of momentum appear too, but they come from a random generator, so a strong move doesn't make continuation more likely. The Sky Trade terminal includes a Momentum indicator. See three white soldiers and three black crows.

Example

Momentum(10) on EUR/USD reads +0.0040: price is 40 pips above where it was 10 candles ago. If the next readings fall to +0.0020 while price still creeps up, the push is weakening.

Learn more in the academy

Three white soldiers and three black crows: momentum or exhaustion?
How three white soldiers and three black crows form, what they say about momentum, why the same run can signal exhaustion, and how to judge them in context.

Related terms

Practise first, then decide

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