Momentum & oscillatorsIntraday Momentum Index · IMI
Tushar Chande's blend of candlestick bodies and RSI — momentum measured from open-to-close instead of close-to-close.
Works best in ranging marketsEngine-computed on a fixed sample series
What it is
The Intraday Momentum Index, or IMI, was created by the technical analyst Tushar Chande to marry two ideas that traders usually keep separate: the overbought and oversold logic of the RSI and the information contained in each candle's body. Ordinary RSI measures momentum from one day's close to the next, ignoring where price opened. IMI instead asks a sharper question: over recent sessions, has the market tended to close above or below where it opened? A market that keeps closing higher than it opened has intraday buying pressure, while one that keeps closing below its open has selling pressure, and IMI turns that tendency into a single number between zero and one hundred. For a beginner, think of it as an RSI that reads the color of the candles rather than the gaps between them.
How it is calculated
For each bar the IMI looks only at the open and the close. If the close is above the open, that bar is an up bar and its gain equals the close minus the open; if the close is below the open, it is a down bar and its loss equals the open minus the close. Over a chosen lookback, commonly fourteen periods, the indicator sums all the gains from up bars and separately sums all the losses from down bars. The IMI is then one hundred multiplied by the sum of gains divided by the sum of gains plus the sum of losses. The structure is identical to Wilder's RSI, but the input is the intraday body rather than the day-to-day change in closes.
Reading it, step by step
Because it is scaled from zero to one hundred, IMI is read with the familiar thresholds: readings above seventy signal an overbought condition where up bodies have dominated, and readings below thirty signal oversold where down bodies have piled up. The fifty line is the balance point where buying and selling bodies roughly cancel. A steady climb toward and above seventy shows persistent intraday accumulation, session after session closing green, while a slide under thirty shows the opposite. Crucially, in a strong trend the IMI can pin near its extremes for a long time, so an overbought reading is a description of pressure, not an automatic sell. As with RSI, divergence, where price makes a new high but IMI makes a lower high, warns that the intraday buying behind the move is thinning.
Best timeframes and settings
The fourteen-period lookback is Chande's standard and a sensible default across timeframes. IMI is most at home on daily charts of instruments that actually move meaningfully between the open and the close, because that open-to-close body is its raw material. Swing traders use it to time entries within a trend on the daily, while some intraday traders apply it to hourly bars where each bar still has a real body. Shortening the lookback toward nine makes it jumpy and quicker to hit extremes, useful for active trading but noisier, whereas lengthening it toward twenty-one smooths the signal and reduces false overbought and oversold flags. Because it depends on a genuine gap between open and close, it is far less meaningful on instruments that barely move intraday or that gap violently overnight.
When and where to use it
IMI was designed as a pullback-timing tool inside an existing trend rather than as a standalone reversal signal. It performs best on liquid cash equities and index products that trade a clear intraday session with a definite open and close. It is a poor fit for markets that trade nearly around the clock with tiny bodies and large overnight gaps, such as many forex pairs, because the open-to-close body loses its meaning when most of the price change happens between sessions. In a trending stock, IMI helps you buy the dips; in a choppy range it behaves like any bounded oscillator, oscillating between its bands. Avoid trusting a single extreme reading in a powerful trend, where the indicator can stay overbought for weeks.
Strategies that use it
Chande's intended use is a trend-pullback entry: first establish that a stock is in an uptrend using a longer moving average, then wait for IMI to dip toward or below thirty as price pulls back, and buy when IMI turns back up, placing a stop under the recent swing low. A mirror strategy in a downtrend sells rallies when IMI pushes toward seventy and then rolls over. A second approach uses divergence for exits and reversals: if price grinds to a new high but IMI prints a conspicuously lower peak, tighten stops or take profit because intraday buyers are no longer following through. A third, more mechanical method treats the fifty-line crossing as a bias filter, only taking long setups from other tools while IMI holds above fifty.
Combining it with other indicators
Because IMI is a timing oscillator, it works best beneath a trend filter such as a fifty or two-hundred period moving average that tells you which direction to trade the pullbacks. Pairing it with support and resistance or a linear-regression channel gives the oscillator a price structure to work against, so an oversold IMI reading at established support is far stronger than one in mid-air. Volume indicators add confirmation that a body-based reversal has participation behind it. Some traders run IMI alongside standard RSI to compare intraday pressure with close-to-close momentum; when the two disagree it reveals that overnight gaps are doing the work rather than the regular session. The theme is to supply direction and location, since IMI supplies only timing.
Where it fails
The most common mistake is shorting simply because IMI is above seventy in a strong uptrend, which repeatedly stops traders out as the trend rolls on. The indicator is also vulnerable to instruments that gap heavily overnight, because a huge gap can leave a small intraday body that understates the real move, giving a misleadingly calm reading. On flat, low-volatility names where the close hugs the open, the sums stay small and the IMI drifts meaninglessly around fifty. Treating it as a reversal trigger in isolation, rather than as a pullback timer inside a trend, is the core error Chande warned against. Guard against these by always trading it with a trend filter and by only using instruments with real intraday range.
A worked example
Consider a stock in a clear uptrend, its price riding above a rising fifty-day moving average at one hundred dollars. Over five sessions price pulls back from one hundred and ten to one hundred and two, and during that dip several candles close below their opens, dragging the fourteen-period IMI down to twenty-eight, an oversold reading. On the sixth session the stock opens at one hundred and two and closes at one hundred and five, a strong green body that turns IMI back up through thirty. Because the larger trend is up and the pullback has cooled momentum, you enter long near one hundred and five with a stop at one hundred and one, just under the swing low, risking four dollars. Price resumes its climb toward one hundred and fifteen, and you trail your stop upward, having used IMI to buy the dip rather than to fight the trend.