Intraday Momentum Index (IMI): Reading Open-to-Close Strength, With Worked Examples

The intraday momentum index asks a narrower question than most oscillators. Not “did the stock close higher than yesterday?” but “did it close higher than where it opened today?” That one change, swapping the previous close for today’s open, makes the IMI a measure of what buyers and sellers did during the session, with the overnight gap stripped out.

On Indian charts that distinction matters more than you might think. A stock can gap up on overnight news, drift lower all day, and still show a green close-to-close change. The RSI sees a good day. The IMI sees a red candle and counts it as a loss. In this guide we walk through the formula, work it out by hand on two 14-session examples, and show where the indicator helps and where it quietly misleads.

What the intraday momentum index measures

The IMI is an oscillator that runs from 0 to 100. It was developed by Tushar Chande as a twist on the Relative Strength Index, according to the StockSharp indicator documentation. Where RSI compares each close with the close before it, the IMI compares each close with the same bar’s open.

Put in candlestick language, the IMI only looks at the real body of each candle. A green body (close above open) adds to the “gains” side. A red body (close below open) adds to the “losses” side. Wicks are ignored. So is the gap between one candle and the next.

That makes it a cousin of other body-based tools. If you have read our piece on the balance of power indicator, you will recognise the idea of judging who won inside the bar rather than across bars.

The IMI formula, step by step

The TA-Lib function reference for IMI lays out the calculation, with a default lookback of 14 bars:

1. For every bar where the close is above the open, record the gain: Close minus Open.
2. For every bar where the close is at or below the open, record the loss: Open minus Close.
3. Add up all the gains over the last 14 bars. Call it the up-sum.
4. Add up all the losses over the same 14 bars. Call it the down-sum.
5. IMI = 100 × up-sum ÷ (up-sum + down-sum).

That’s it. No smoothing, no exponential averages. Each new bar enters the window and the oldest one drops out. TA-Lib lists the 14-bar window as its default, and StockSharp uses the same default length.

One edge case is worth knowing. If every candle in the window is a doji, with open equal to close, both sums are zero and the formula divides by nothing. StockSharp’s implementation sets the IMI to 50 in that case, the neutral midpoint. Other platforms may handle it differently, so check yours if you trade thinly traded counters where flat bars are common.

Worked example 1: a steady uptrend, read two ways

Take a hypothetical stock, call it ABC Ltd, over 14 trading sessions. The numbers below are made up for illustration, in rupees.

Add the gain column: 6 + 4 + 5 + 2 + 2 + 2 + 3 + 2 = 26. Add the loss column: 2 + 3 + 4 + 3 + 3 + 3 = 18. So the IMI is 100 × 26 ÷ (26 + 18) = 100 × 26 ÷ 44, which comes to about 59.1.

Now look at the same data through closes alone. ABC went from 506 to 586 over the fortnight. Closes run 506, 512, 513, 526, 527, 538, 537, 551, 550, 562, 563, 574, 575, 586. Of the 13 moves between consecutive closes, only two were down: 538 to 537 and 551 to 550, a rupee each. The 11 up moves add to 82 rupees. A simple close-to-close ratio, built the same way as the IMI, would read 100 × 82 ÷ (82 + 2) = 100 × 82 ÷ 84, roughly 97.6.

So which number is right? Both, because they answer different questions. The close-to-close view says the stock has been rising almost without pause. The IMI says that within the sessions themselves, buyers only had a modest edge. Most of the rupees gained came from the stock opening higher each morning, not from buying pressure during market hours.

The IMI doesn’t care where a stock opened relative to yesterday. It only cares who controlled the tape between the opening bell and the close.

For a positional trader, that might be fine. A stock that gaps up every day on strong news flow is still going up. But for someone trading the session itself, a reading near 59 says the intraday edge is thin, and chasing entries after the open may not pay as well as the daily chart suggests.

Worked example 2: the gap-and-fade trap

The second example is where the IMI earns its place. Here is another hypothetical stock, XYZ Ltd, that gaps up almost every morning and then gets sold through the day.

Every single close is higher than the one before it. Closes climb from 504 to 596, a gain of 92 rupees with no down day at all. A close-to-close ratio would sit at 100, as stretched as it can get.

The IMI tells a very different story. Only session 1 has a green body, worth 4. The other 13 sessions are red, and their bodies add to 3 + 4 + 5 + 3 + 5 + 3 + 4 + 3 + 4 + 3 + 3 + 3 + 4 = 47. IMI = 100 × 4 ÷ (4 + 47) = 100 × 4 ÷ 51, about 7.8.

A reading of 7.8 is deep in the zone most traders call oversold. But read it in context and it isn’t saying “buy”. It’s saying that for two weeks, every rupee of this rally was made before the market opened, and sellers have used each morning’s strength to get out. That is distribution, and it is exactly the pattern a daily line chart of closes will hide from you.

We see versions of this on Indian counters around results season or a hot theme. Overnight news, a strong pre-open, a big gap, and then steady selling into the day. The daily close may still be green against yesterday. The candle is red. The IMI picks that up; RSI built on closes does not.

Updating the IMI the next day

Because there is no smoothing, rolling the window forward is simple. Go back to ABC Ltd. Say session 15 opens at 590 and closes at 598, a green body of 8.

• Session 1 (gain of 6) drops out of the window.
• Session 15 (gain of 8) comes in.
• New up-sum = 26 − 6 + 8 = 28. The down-sum stays at 18.
• New IMI = 100 × 28 ÷ 46, roughly 60.9.

Notice how much a single bar moves the reading in a 14-bar window: about 1.8 points here. With a shorter lookback, say 5 bars, each candle carries far more weight and the line gets jumpy. With a longer one, it smooths out but reacts late. That trade-off is the same one you face with any RSI-style tool.

How traders read IMI levels

The usual reading borrows straight from RSI. StockSharp’s documentation describes these conventions:

• Above 70: typically viewed as overbought, meaning green bodies have dominated the window.
• Below 30: typically viewed as oversold, meaning red bodies have dominated.
• Above or below 50: which side has had the upper hand inside the sessions. A cross up through 50 is often read as a bullish sign, a cross down as bearish.
• Divergence: price makes a new low while the IMI makes a higher low (bullish), or price makes a new high while the IMI makes a lower high (bearish).
• Failure swings: if the IMI can’t reach overbought during an advance, the advance may be weaker than it looks; the same logic applies in reverse for a decline.

Treat those as conventions, not rules. Example 2 shows why. A reading of 7.8 on a stock that is making a new closing high every day isn’t a bargain signal. It’s a warning that the buying is happening somewhere other than the regular session.

Using the intraday momentum index on intraday charts

Despite the name, nothing stops you running the IMI on a 15-minute or 5-minute chart. The maths is identical; each “bar” is just a shorter slice of time. On a 15-minute chart, a 14-bar window covers three and a half hours of trading, so you are measuring whether buyers or sellers have controlled the last few hours.

Two things change, though. First, on short timeframes there are barely any gaps between bars, except at the day’s open, so the IMI and a close-to-close RSI will track each other more closely. The gap-filtering advantage mostly disappears. Second, very small bodies and dojis become common in quiet patches, and a handful of them can swing the ratio sharply. Many intraday traders find the IMI most useful on daily bars precisely because that is where the overnight gap lives.

A simple routine that puts it to work

Here is one way to fold the IMI into a daily review, without pretending it is a system on its own.

1. Plot it next to RSI. Use the same 14-period lookback for both. When they agree, you have learnt little. When they disagree sharply, as in example 2, you have found something worth looking into.
2. Check the gaps. A big gap between RSI and IMI almost always means the stock has been gapping. Gap-ups with red bodies point to selling into strength. Gap-downs with green bodies point to buyers stepping in after a weak open.
3. Use 50 as a filter, not a trigger. If you only want to buy stocks where buyers are winning the session, ask for an IMI above 50 before you look for an entry setup.
4. Confirm with price structure and volume. An IMI turn is a hint. Support and resistance, a breakout level or a volume read gives you the actual entry and stop.

Our post on the Chande Momentum Oscillator covers another of Chande’s tools, which also splits up and down moves cleanly. The two pair well: one looks across sessions, the other within them.

When RSI and the IMI disagree by a wide margin, the disagreement is the signal. It usually means the overnight gap is doing the work that intraday buying isn’t.

Where the IMI misleads

• It throws away the wicks. A candle that opens at 500, drops to 470 and recovers to close at 502 counts as a small gain of 2. The violent intraday swing is invisible.
• It ignores gaps entirely. That is a feature in example 2 and a bug elsewhere. A stock that gaps up 8% on a big order win and closes flat has had a great day for shareholders. The IMI scores it as nothing.
• It weights by rupees, not percentages. A 5-rupee body on a ₹100 stock and a 5-rupee body on a ₹5,000 stock count the same within each stock’s own calculation. That’s fine for one stock over time, but never compare IMI levels across stocks with very different price ranges and volatility without thinking about it.
• Doji-heavy windows are unstable. When most bodies are tiny, a single larger candle can swing the reading from one extreme to the other.
• Overbought can stay overbought. A strong trend with steady green bodies can hold the IMI above 70 for weeks. Selling every time it crosses 70 can be an expensive habit.

Quick recap of the numbers

In example 1, ABC Ltd gained 80 rupees in closing price over 14 sessions, yet its IMI was only about 59.1, because most of the advance came from higher opens. In example 2, XYZ Ltd rose 92 rupees on closes with no down day, but its IMI was about 7.8, because 13 of 14 candles were red. And rolling ABC forward one day with a green body of 8 lifted its IMI to about 60.9.

The IMI is a small, focused tool. It tells you who won the session, bar by bar, and nothing more. Put it beside a close-based oscillator and the gaps start telling their own story. For how it fits with trend, volume and pattern tools, start with our guide to technical analysis for Indian stocks.

Sources

• TA-Lib: Intraday Momentum Index (IMI) function reference
• StockSharp documentation: Intraday Momentum Index

Disclaimer: This article is for education only and is not investment advice. The prices in the worked examples are hypothetical. Technical indicators can give false signals; do your own research or consult a SEBI-registered adviser before trading.