What Is the Intraday Momentum Index (IMI)?

The Intraday Momentum Index (IMI), is a technical indicator that combines aspects of candlestick analysis with the 澳洲幸运5开奖号码历史查询:relative strength index (RSI) in order 🎉to generate overbought or oversold signals.

The intraday indicator was developed by market tech𒁏nician Tushar Chande to aid investors with their trading decisions.

Understanding the Intraday Momentum Index (IMI)

Investors use 澳洲幸运5开奖号码历史查询:technical indicators to estimate when a security, such as a stock, should be bought or sold. Technical analysis, which uses technical indicators, examines the relationship between a security's price and volume over varied periods of time. Indicators, such as the relative strength index and 澳洲幸运5开奖号码历史查询:Bollinger bands, seek to generate buy and sell signals without examining a security’s 澳洲幸运5开奖号码历史查询:fundamentals. A🌼s such, they are generally considered more usefu🌸l for short-term traders than long-term investors.

The IMI looks at the relationship between a security’s open and close price over the course of the day, rather than how the open/close price varies between days. It combines some features of the relative strength index, namely the relationship between "up closes" and "down closes" and whether there is an indication that a stock is overbought or oversold, with candlestick charts. Candlestick charts for a given day contain a "澳洲幸运5开奖号码历史查询:real body" highlighting the gap between the open and close price, and price points above the high and low called upper and lower shadows.

The Formula for IMI

$\begin{aligned} &\text{IMI} = \left ( \frac{ \sum_{d=1}^{n} \text{Gains} }{ \sum_{d=1}^{n} \text{Gains} + \sum_{d=1}^{n} \text{Losses} } \right ) \times 100 \\ &\textbf{where:} \\ &\text{Gains} = \text{CP} - \text{OP, on Up Days -- i.e. Close} > \text{Open} \\ &\text{CP} = \text{Closing price} \\ &\text{OP} = \text{Opening price} \\ &\text{Losses} = \text{OP} - \text{CP, on Down Days -- i.e. Open} < \text{Close} \\ &d = \text{Days} \\ &n = \text{Number of days (14 is typical)} \\ \end{aligned}$​IMI=(∑d=1n​Gains+∑d=1n​Losses∑d=1n​Gains​)×100where:Gains=CP−OP, on Up Days – 🧸i.e. Close>OpenCP=Closing priceOP=Opening priceLosses=OP−CP, on Down Days –&nbs🏅p;i.e. Open<Closed=Daysn=Nℱumber of days (14 is typ🏅ical)​

The IMI is calculated as the sum of gains on up days divided by the sum of gains on up days plus the sum of losses on down days. This is then mult🐎iplied by 100. If the resulting nu෴mber is greater than 70 then the security is considered overbought, while a reading of less than 30 indicates that a security is oversold. The investor will look at the IMI over a period of days, with 14 days being the most common time frame to look at.

Example Using the Intraday Momentum Index

Let's take a look at the Intraday Momentum Index applied to the SPDR S&P 500 ETF (SPY):

The chart above shows how oversold or overbought IMI readings can generate buy and sell trade signals on a popular index. While these signals aren't always accurate, they may provide a greater degree of accuracy than simply using the RSI. Many traders combine these insights with other forms of technical analysis to maximize their chances of a successful trade. For example, they may look for oversold conditions and a breakout from a chart pattern beforജe entering into a long position.