Many traders only focus on the shape of the candles and the current price…
But the professional trader always asks:
“Is there real momentum supporting the movement? Or is it just an illusionary movement?”
In this post, let's simply understand:
What is momentum?
And how do we use it to enter and exit intelligently instead of getting stuck at the peaks or troughs of the movement?
🧠 First: What is momentum?
Momentum is the force of movement in the market:
Not just the direction (up or down),
But the speed, strength, and clarity of this movement.
Imagine two cars:
The first moves quietly at 20 km/h
The second is rushing at 140 km/h
Both are moving forward, but the true momentum is with the second.
The same thing on the chart:
A stock rises slowly… while another soars with strong consecutive candles and high trading volumes → that is momentum.
📈 Signs of strong upward momentum
Look for these signs together:
Strong consecutive candles
Candle bodies are large, and the opposite shadows are small.
High trading volumes
Every bullish candle is accompanied by Volume higher than the average.
Ascending peaks and troughs (Higher Highs & Higher Lows)
Every new peak is higher than the previous one, and every trough is higher than the previous trough.
The price is above moving averages (like EMA 20 and EMA 50)
And whenever the price touches it, it rebounds upwards.
These signals tell you:
“Buyers are not just visitors… but they are in control.”
📉 Signs of bearish momentum are the exact opposite:
Strong consecutive red candles.
High trading volumes in the decline.
Descending peaks and troughs.
The price is below the moving averages and respects them as resistance.
Here the market is clearly saying:
“Stay away from random buying… or at least do not oppose the trend.”
🧩 How do we use momentum in our decisions?
1️⃣ Do not enter against strong momentum
If the market is in a sharp downward wave, strong red candles + selling momentum:
Buying just because 'the price became cheap' = high risk.
The wise waits:
Weak selling momentum
Or the emergence of new buying momentum (a real reversal, not just a minor bounce).
2️⃣ Enter with momentum… but from smart areas
Instead of chasing a green candle that has exploded:
Wait for a small correction within the trend (Pullback).
Then:
Watch for a reversal candle in the direction of momentum (for example, a weak bearish followed by a strong bullish in an upward trend).
Then the entry is 'with momentum' but from a better price.
A simple example:
The trend is upward on the 1H frame.
The price is above EMA 20 and EMA 50.
A slight decline towards the averages with weak volume occurred.
A strong bullish candle appeared afterward + higher volume.
👉 This is often an entry with momentum, not against it.
🧮 The best indicators for measuring momentum (for those who love indicators)
Do not rely on it alone, but use it as supporting tools:
RSI
Strong upward momentum: RSI is above 50 and occasionally enters 70+
Strong bearish momentum: RSI below 50 and often approaching 30 or below.
MACD
Bullish crossover + histogram columns rising ⇒ buying momentum.
Bearish crossover + negative columns expanding ⇒ selling momentum.
Moving Averages
The price is above EMA 20 & EMA 50 and there is a healthy distance between them + every correction touches them and rebounds ⇒ continuous upward momentum.
❌ Common mistakes in dealing with momentum
Entering late after the momentum has ended
You see the currency has surged 40% and you think: “I’ll jump in now before I miss out.”
You often enter at the end of the wave… and you are the liquidity that others sell on.
Ignore momentum decline
The same direction continues, but:
Trading volumes decrease
The candles become smaller
Indicators show divergence (like RSI not rising even though price is rising).
This is a warning that momentum is weakening and a reversal may be approaching.
Relying on just one candle
A strong green candle in the middle of a downward trend does not mean that upward momentum has started.
The important thing: a consecutive behavior, not a 'lone candle'.
🎯 Practical summary
Momentum is the 'true mood of the market'
And not just random price movement.
When momentum is strong and clear:
Enter with it from correction areas, do not oppose it.
When momentum is weak or contradictory:
Reduce the trade size, or wait for a clearer opportunity.
And when you see that momentum starts to choke (volumes decrease, candles weaken, divergence):
Think about taking profits instead of greed.
Write to me in the comments:
Do you rely on momentum in your trading?
And what is the most relevant indicator that helps you read the strength of movement? 👇
#تداول #الزخم #Crypto #إدارة_الحافظة_الأستثمارية #تداول_العملات_المشفرة
