IMI - Intraday Momentum Index

Intraday Momentum Index was created by Tushar S. Chande and Stanley Kroll. They described it in the "New Technical Trader" book (1994). It's quite similar to RSI and its aim is to reveal the oversold and overbought levels.

The construction of Intraday Momentum Index is very similar to Relative Strength Index. While RSI compares Gains and Loses as for Close - Close prices, IMI does the same for Close - Open price. That's the reason why it's being called "intraday". It compares difference within the same day, not between two different days.

IMI formula looks following:

1. If Close > Open: Gains = Gain (n-1) + (Close - Open); Losses = 0
2. If Close < Open: Losses = Loss (n-1) + (Open - Close); Gains = 0
3. Add Gains and Losses for n chosen days ago
4. IMI = 100 x (Gains / (Gains + Losses))

How to use it:

• Levels above 70 are considered to be overbought while levels under 30 are being oversold
• You can also try to combine the indicator with its EMA and follow their crossings
• The divergences of the indicator with its price can be traded as well