Momentum progression is something people have a problems relating the market movement to. Progression as in continuation of bearish or bullish divergences. The issue really is determining what those divergences really mean and how does it relate to the price action and to do in real time.
The main problem is real time assessments. Some people really have no clue how to relate time frames to stitch together the price action and even momentum. Some people have a flawed understanding of oscillators. They know what a certain divergence looks like but have no way of understanding how it relates to the price action. This is another topic of discussion all together.
What is momentum progression?
When reading momentum, you must understand if it is strengthening or weakening? How does it relate to higher time frame? Is it affecting the higher time frame in the same manner or is it being absorbed?
Lets revisit the bucket analogy. If your 133tk chart is looking like it is building up bullish momentum, but your 1600tk or 5min is still highly bearish, you can easily say, that the 133tk bullish build up is being absorbed. Your price action would follow the 1600tk or 5min chart. The 133tk chart represents a tiny bucket. It may sow your momentum go up and down like crazy. In order to see what it is really doing, you look at a larger bucket like the 1600tk or 5min chart. Between the small and large, which will have a more true representation of the momentum or trend? Yes, the larger.
Why is my price continuing to go down when my momentum is trying to go up? Its like applying your breaks. You wont go to a full stop till you build up enough force to do so. But if you broke down your elapse time, and notice the speed dropping for insignificant amounts to significant amount, the change in momentum in the 133tk, is why we say that, you will notice the changes in your lower time frames first. Will the car stop at this point. No, it still moving and so will the price.
Although the price continues to follow the trend, the 133tk build up of bullish momentum continues after some time, that the 1600tk momentum begins to turn bullish as well, you are starting to see confirmation. Your price action should start to move sideways.
Why does the price action go sideways? Because now those breaks you have applied and continued to apply, has started to affect the speed so significantly that you slow the car down. Is the car still moving forward yes. Because you have not come to a complete stop. The amount the price can continue in its current direction is limited.
The next thing that will happen in time is that the 5min will turn up as well causing the 10min, ect ect. This kind of progression does 2 things.
- Offsets bearish volume (in this case) with bullish
- Causes a potential change in trend
Depending on the time frame you are viewing this kind of action is repeated in the smallest time frame which can turn around in minutes or seconds, to days, weeks and years. Regardless the whole process will happen in all time frames over and over again.
When you reach a price, for example a revisit of the previous high/low, you want to ask, was I more bullish/bearish then or now? A really important question to ask. Because if you are bearish, you must really consider to short before it drops on you on the new high, or go long immediately if you are more bullish on this new low.
I’m not going to share anymore charts on this concept. There are plenty in the blog already. Yes, seriously, it is that simple. And yes again, we are describing Accumulation and Distribution.
Okay i’ll share 2 charts:
Bearish Progression
Bullish Progression
Special thanks to OptionGal, who saved these files that I lost.