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VEL measures the speed and direction of trending price. It is our superior version of the classic momentum oscillator. VEL is much smoother.



An easy way to tell whether a trend is decelerating (losing momentum) is to spot disagreement between the direction of the market and direction of its own momentum. This disagreement is called "divergence" and VEL's smoothness and timing lends itself to a very powerful form of divergence analysis.

The chart below shows higher swing-highs during segment A of both the price and VEL time series. This parallel behavior suggests a continued price trend, which occurs during price segment B. However, in segment B, the swing-high is now lower in the VEL series. This divergence says the upward price action is rapidly decelerating and suggests an impending reversal. As shown, price does trend lower during the 2nd half of the chart. In segment C we see price potentially starting a new uptrend, but its divergence with VEL's lower swing-highs suggests there's no real energy to the upside, and price continues its downward movement.

VEL demo

  • Different time frames on a chart may produce different results.

  • Please do not ask us for indicator parameter settings. Every market is different.

  • Past performance of any trading system is never a guarantee of future performance.

  • All trading strategies have risk and commodities/futures trading leverages that risk.

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