ETH Momentum Index (EMI)
The ETH Momentum Index (EMI) applies Commodity Channel Index (CCI) methodology to Ethereum, creating a momentum oscillator with expanding statistical bands. Color-coded zones identify when ETH is trading in undervalued, neutral, strong, or overheated momentum conditions.
Understanding ETH Momentum Index
CCI Methodology
The Commodity Channel Index (CCI) measures price deviation from its statistical average. Positive CCI values indicate price is above average, while negative values show below-average prices. By using expanding windows for statistical calculations, the EMI provides dynamic thresholds that adapt to Ethereum's evolving volatility and market structure.
Momentum Zones
The indicator uses four color-coded zones: Green (below lower band) indicates undervaluation and potential opportunity; Yellow (between lower and mid bands) represents neutral momentum; Orange (between mid and upper bands) shows strong momentum; Red (above upper band) signals overheated conditions requiring caution. These zones help visualize Ethereum's momentum cycle position.
Dual-Panel Layout
The top panel displays Ethereum's price on a logarithmic scale, while the bottom panel shows the EMI oscillator with its dynamic bands and colored momentum zones. Synchronized x-axes allow easy correlation between price moves and momentum conditions. This layout helps identify momentum divergences and overextension relative to historical patterns.
Trading Strategy
Traders use EMI for timing ETH entries and exits based on momentum extremes. Buying when EMI enters the green zone (undervalued) during bull markets offers favorable risk-reward. Selling or reducing exposure when EMI reaches the red zone (overheated) helps avoid blow-off tops. Monitoring EMI transitions between zones provides early signals of changing momentum regimes and potential trend shifts.