Intrady Momentum Index[IMI]

#momentum #oscillator #candlestick #overboughtoversold 

Inventor: Tushar Chande 

Tushar Chande’s blend of candlesticks and RSI. Instead of comparing close to previous close like RSI, it compares each bar’s close to its own open – the candle’s body. White candles (close above open) count as buying, black candles (close below open) count as selling, combined with the RSI formula over 10 bars. Moves between 0 and 100. 

Default period: 10 

Above 50 indicates white candles dominating, buyers winning the sessions. Below 50 indicates black candles dominating. 

Useful readings: 

IMI above 70: Overbought, sessions one-sidedly bullish, pullback risk 

IMI below 30: Oversold, sessions one-sidedly bearish, bounce likely 

IMI crossing above 50: Session control shifting to buyers 

IMI diverges from RSI: Candle bodies telling a different story than closes, worth attention 

Price makes new low but IMI does not: Bullish divergence, selling sessions weakening 

Popular among options traders for timing entries in range markets 

Objective rules: 

Bullish: IMI crosses above 30 from below. 

Bearish: IMI crosses below 70 from above. 

Trend filter: Take the oversold buy only when price is above 200 SMA; the overbought sell only below it 

Session shift rule: IMI crosses above 50 after being below 30, momentum recovery confirmed 

Exit: IMI reaches the opposite extreme zone 

What makes it unique: 

It applies RSI mathematics to candle bodies – close versus open – so it scores who won each session, not each day-to-day change. It is candlestick philosophy in oscillator form. 

The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.

This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

 

The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.