Ethereum Momentum Index

System Overview

Similar to our BMI, the Ethereum Momentum Index (EMI) is a sophisticated technical analysis tool designed to capture the price dynamics of Ethereum in this case by tracking its underlying momentum through a multi-layered statistical approach.

System Overview

The EMI leverages a robust statistical framework to compute momentum, ensuring an adaptive and dynamic representation of Ethereum's price action.

Dynamic Statistical Analysis
1. Utilizes an expanding window calculation technique
2. Computes cumulative statistical measures that evolve with each new data point
3. Dynamically adjusts based on historical price behavior
Key Calculation Steps
1. Cumulative sum of price-related values
2. Cumulative sum of squared values
3. Expanding mean calculation
4. Variance estimation using a rolling computational method
5. Standard deviation derivation
Momentum Bands
1. Upper Band: Expanding mean + (1.4 * expanding standard deviation)
2. Mid Band: Average of upper and lower threshold lines
3. Lower Band: Expanding mean - (1.2 * expanding standard deviation)

How To Use This System

The Ethereum Momentum Index helps traders and analysts interpret market conditions through its segmented momentum zones.

Red Zone (Extreme High Momentum): Indicates strong directional pressure, suggesting potential overextension.
Orange Zone (High Momentum): Reflects sustained positive momentum and signals a strong trend continuation.
Yellow Zone (Moderate Momentum): Represents a balanced market state, often associated with consolidation phases.
Green Zone (Low Momentum): Highlights trend exhaustion and signals possible market reversals or further consolidation.

Created By

Alpha Extract in March 2025