Take a glance at AUDUSD:
If PRICE continues to close higher, PRICE is trending up. The angle of PRICE making higher PRICES is MOMENTUM and, in itself, “THE” indication of trend strength (or weakness).
If you cannot see that at first glance, then just look at PRICE relative to our MAs. Is PRICE moving in parallel with them or getting nearer to them or moving away from them?
If you still cannot see Trend Strength then draw straight lines on the swings. Observe the angle of those lines.
Usually, but not always, the steeper the slope of PRICE (line) the nearer PRICE is to exhaustion.
Gann declared that a 45 degree PRICE slope was the ideal slope for steady, trending PRICES.
The slope of lines A & B are very steep, greater than 45 degrees and warn us that PRICE does not usually continue at this speed.
Line C is more gradual and basically changes into Line D where it again exhausts itself.
Line E is a short exhaustion trend.
Lines F & G, being down, will always be steeper than their “UP” counterparts due to the effect of gravity (PRICE falling).
We also know that at turning points and end of trends, PRICE usually, but not always, “peters out” (loses momentum – loses the energy driving/pushing it) which is shown by smaller bodied candles. This is not a hard and fast rule as PRICE sometimes PAUSES in a similar manner before continuing the original trend.
The RSI and this “Trend Strength” indicator is supposedly for trading trends BUT just applying this to our trendy AUDUSD would whipsaw you so badly that you would wish you had never heard of trading forex!
Again, the best indicator for ANYTHING is between your ears.
