Implement Crossover Signal

[kenorb]

Add a second line to the Momentum Chart Indicator. Typically, that would be a Simple Moving Average of the Momentum Indicator itself. The length of the moving average could be whatever the trader chooses, but a common setting is a 10, 14, or 21 period moving average. You must have both the Momentum line and the MA line plotted in order to utilize the crossover signal.

The basic idea is to buy when the momentum line crosses the Moving average from below, and sell when the momentum line crosses the Moving average from above. This by itself would be a very rudimentary application, but we can enhance these types of signals by taking trades only in the direction of the underlying trend or taking signals only after an Overbought or Oversold condition has been met. Take a look at the chart below which shows a Momentum Crossover Buy Signal coupled with an RSI oversold reading.

Refs: https://forextraininggroup.com/understanding-trading-momentum-indicator/