Hello IQ Option trader. Are you wondering which chart analysis tool to use to enhance your winnings?
Is your strategy not that good enough to assure you of a win after win on IQ Option?
Then that would be probably because there are some technical analysis tools which you don’t know about or just fail to use, deliberately.
To add to your knowledge about technical indicators on IQ Option, today I’ll teach you how to use the Intraday Momentum Index.
Are you ready to learn?
Here’s what to expect in the article.
- What is the Intraday Momentum Index – IMI on IQ Option?
- The Principle behind the Intraday Momentum Index.
- How to use the Intraday Momentum Index – IMI on IQ Option.
- Using the Intraday Momentum Index to Trade on IQ Option.
What is the Intraday Momentum Index – IMI on IQ Option?
The Intraday Momentum Index (IMI) is a technical indicator that combines the aspects of Candlestick analysis with the Relative Strength Index (RSI). This indicator provides investors with a way to find optimal days to buy and sell.
The IMI looks at the relationship between a stock’s open and close price over the course of the day.
It is not concerned with how the open and close prices vary between days but within that specific day.
It then combines candlestick chart analysis with some features of the RSI.
- The relationship between up closes and down closes.
- Whether there is an indication that a stock is overbought or oversold.
Who developed this indicator?
The Intraday Momentum Index was developed by Tushar Chande.
On IQ Option charts, it appears as a continuous line oscillating between 30 and 70 at the bottom part of the interface below the price chart.
The Principle behind the Intraday Momentum Index.
The Intraday Momentum Index is a cross-breed between Candlestick analysis and Relative Strength Index.
It identifies the candle type that dominated the recent price movement in order to show the extremes of the intraday momentum.
As the market tries to rise after a sell-off, there are gradually more bullish candles than bearish candles.
The Intraday Momentum Index can detect this reversal as its values will rise towards the 70 marks.
Even though the prices could have remained in narrow ranges, the IMI could still detect the reversal.
As the market tries to fall after a peak, on the other hand, there will be more bearish candles than bullish candles.
The Intraday Momentum Index will show this by having its values decrease towards the 30 mark.
Unlike those two scenarios, when the market is ranging, it is not easy to establish which candlestick takes the lead.
So the number of bullish and bearish candlesticks will be almost similar with minor variations.
The Intraday Momentum Index values will be in the middle neutral range between 40 and 60.
How is this indicator calculated?
This is how the Intraday Momentum Indicator is calculated;
The sum of Gains on up days is Divided by the total (Sum of Gains on up days plus Sum of Losses on down days).
The figure you get after dividing is multiplied by 100.
Now, if the number you get after multiplication by 100 is greater than 70, then the asset is overbought!
If the number you get is less than 30, the stock is oversold.
How to Set Up the Intraday Momentum Index on IQ Option.
Set Up the Intraday Momentum Index on IQ Option in the following steps.
- Log in to your Iq Option trading account.
- Locate the Tools Tab at the bottom of the interface – Scissors like.
- Hit the Tools Tab.
- Select Indicators from the Options that pop up. A list of Indicators will appear.
- Select Intraday Momentum Index from the list.
- A pop up will appear for you to modify the Period, the mainline color and width, and the support lines’ colors and widths.
- Hit the Apply button once you adjust those parameters.
- A continuous line oscillating between 30 and 70 will appear at the bottom part of the interface below the chart.
Intraday Momentum Index is ready for use!!!
Using the Intraday Momentum Index to Trade Forex on IQ Option.
Remember we mentioned that the Intraday Momentum Index provides investors with a way to find optimal days to buy and sell.
Now it’s time to find out exactly how that works.
How do traders on IQ Option find trading opportunities using the Intraday Momentum Index?
The Intraday Momentum Index provides IQ Option traders with three very important signals
- Overbought condition signal.
- Oversold condition signal.
- Overbought condition signal.
Intraday Momentum Index values above 70 are considered too high and the asset overbought.
If the Intraday Momentum Index reads above 70, you have just identified an overbought condition!!
How do you trade overbought conditions on IQ Option?
Prepare to enter a Sell Position because that’s a signal for a downward trend reversal.
- Oversold condition signal.
Intraday Momentum Index values below 30 are considered too low and the asset oversold.
If your Intraday Momentum Index value is below 30, you have an oversold condition to handle.
How are oversold conditions handled on IQ Option?
The way to handle them is by preparing to enter a Buy Position.
These occur when the asset price is not getting confirmation in the value of the Intraday Momentum Index.
The Intraday Momentum Index trend follows a different path from what the price chart is showing.
Scenarios like these point towards a trend reversal.
For example, when the price on the chart keeps on falling and the Intraday Momentum Index shows increasing highs, that’s a divergence.
It shows that a bottom is about to strike and soon the price will be rising.
The vice versa is true about a rising price against a decreasing IMI value.
Divergences are not recommended for newbies.
They may be difficult and cunning to trade.
You can combine the Intraday Momentum Index with other chart analysis tools for more accurate predictions.
Include the Intraday Momentum Indicator in your IQ Option trading strategy today and enjoy the profits!!