Momentum can be used as a measure of the volume of a market.
If prices are changing rapidly (meaning that momentum is high), it’s likely that a large number of traders are buying or selling the asset to push the price change in either direction.
Extremely high or extremely low values for momentum are taken as signs that an asset is either overbought or oversold.
If momentum reaches an extreme high, the asset is considered overbought.
If momentum reaches an extreme low, the asset is considered oversold.
When momentum reaches an extreme low and then rapidly advances back upward across the zero line. this signals a buy.
When momentum reaches an extreme high and then rapidly falls below the zero line, this signals a sell.