BTC Momentum TrackerI'm starting a new series called "BTC Momentum Tracker." The reason for this is that I've developed an indicator that captures the somewhat abstract concept of "momentum" in a way that I believe is quite sound. It breaks down momentum into bullish and bearish components and allows us to derive the MACD and its signal and various geometries if we want.
While many existing momentum indicators are useful and provide traders with insights, it can be difficult to argue for the advantages of one over simply looking at the RSI or MACD histogram, the most notable momentum indicators, in a sense that they basically highlight only the bullish component of it. I think, in this regard, Gann traders might argue that the Gann Fan inherently includes the concept of momentum and that it is more powerful than simply referencing "momentum" as a vague notion.
As mentioned earlier, the "Momentum Tracker" indicator decomposes momentum into components. These are displayed in a dynamic table, where items are algorithmically sorted from higher to lower, corresponding to a left-to-right direction.
In my indicator, bullish momentum is represented in green, bearish momentum in red, and total momentum in white. The background color turns red at the death cross between the red and green lines and green at the golden cross. Fundamentally, it assumes that the market has bullish and bearish momentum, as well as total momentum, which can be seen as their resultant force. This concept is generally easy to accept.
Since it often clearly aligns with the asset's price highs and lows, some might think it’s retrospective. If you think that way, I kindly ask you to stop reading this article.
I'll explain the additional components, such as MACD, harmonic patterns, and fair value gaps, as they are introduced. When total momentum is above the MACD, the market is considered bullish, and when it is below, the market is considered bearish.
I'll get into the main topic of analyzing the current BTC status in the next analysis article.
