Intraday Momentum Index
The Intraday Momentum Index (IMI) is a technical indicator that combines aspects of candlestick analysis with the relative strength index (RSI) in order to generate overbought or oversold signals.
The Intraday Momentum Index (IMI) generates trading signals using relative strength (RSI) in conjunction with candlestick charting within a specific timeframe, rather than exploring the entire history of the asset.
Technical analysis, which uses technical indicators, examines the relationship between an asset’s price and volume over various periods of time. Indicators, such as RSI and Bollinger bands, seek to generate buy and sell signals without examining the asset’s fundamentals. As such, they are generally considered more useful for short-term traders than long-term investors.
IMI looks at the relationship between an asset’s opening and closing price over the course of a given period, rather than how the opening and closing price varies between periods. It combines some features of RSI, namely the relationship between "up closes" and "down closes" and whether there is an indication that an asset is overbought or oversold, with features of candlestick charts. Candlestick charts for a given period contain a "real body" highlighting the gap between the open and close, as well as price points above the high and low called upper and lower shadows.
Technical analysts can use IMI to anticipate when a security is overbought or oversold.
IMI
Calculation
Intraday Momentum Index = {[∑(d=1)(n)Gains)] / [(∑(d=1)(n)Gains) + (∑(d=1)(n)Losses)]} × 100
Where:
CP = closing price
OP = opening price
Gains = CP-OP on “up” days (an up day is when the close is above the open)
Losses = OP – CP (on “down” days; when the close is lower than the open)
d = days
n = number of days (by default 14)
IMI is thus defined as the sum of gains from up days divided by the sum of gains during up days plus the sum of losses on down days, multiplied by 100.
