Momentum is displayed to quickly see the quality and strength of a trend based on a calculation of the Index (DMI). The DMI is an indicator developed by J. Welles Wilder in 1978 that identifies in which direction the price of an asset is moving. The DMI is calculated by comparing prior highs and lows and produces 2 measurements illustrating the strength of the current trend:
-> a positive line ( ); and
-> a negative line ( ).
The ( ) measures the strength of the current trend, either or ; a reading above 20 typically indicates a strong trend.
-> Green bars indicate an uptrend i.e. when is above and is greater than 20 - there is more upward pressure than downward pressure in the price;
-> Red bars indicate a downtrend i.e. when is above and is greater than 20 - there is more downward pressure on the price; and
-> Yellow bars indicate no strong directional trend and potential for a reversal.
spikes 50% above average are then flagged as dots at the bottom of the chart (although you can change this location), confirming the momentum further.
This indicator should compliment other popular indicators, as confirmation whether to stay in a position or not.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.