There is no upper or lower boundary for the momentum indicator. Therefore, it is important for forex traders to look into the history of the momentum line and plot horizontal lines along its boundaries. Once the momentum line reaches these levels, the currency pair may be overbought or sold. Because momentum is an unbound oscillator, there is no upper or lower boundary. It is, however, subjective to determine whether a currency pair is overbought or oversold. When the momentum indicator is overbought, the price can continue to rise. In the opposite case, the price can continue its downward adjustment if the momentum indicator is oversold.

Forex momentum is a crucial concept in currency trading, as it reflects the strength and speed of price movements, helping traders identify potential trends and reversals. By analysing momentum indicators like the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD), traders can gauge whether a currency pair is overbought or oversold, improving decision-making. Momentum trading allows traders to capitalise on strong trends, entering positions when prices move decisively in one direction and exiting before momentum fades. Additionally, it helps filter out market noise, providing clearer signals for high-probability trades. Without understanding momentum, traders risk entering weak or exhausted trends, leading to losses. Thus, mastering momentum analysis enhances trading strategies, improves timing, and increases profitability in the fast-paced forex market.