Rational reasons for the momentum strategy: Trend-following: The momentum strategy is based on the idea that trends in asset prices tend to persist in the short term. By buying assets that have shown positive price momentum, traders aim to profit from the continuation of these trends. Market efficiency: The momentum strategy assumes that markets are not perfectly efficient and that there are patterns in asset prices that can be exploited. Traders believe that by identifying and trading on these patterns, they can generate profits. Irrational reasons for the momentum strategy: Herding behavior: Traders may engage in momentum trading due to herd behavior, where they follow the actions of others without considering the underlying fundamentals of the assets. This can lead to price distortions and create opportunities for momentum traders. Overreaction and underreaction: The momentum strategy is based on the assumption that investors tend to overreact to new information, causing prices to move in the same direction for an extended period. However, this assumption may not always hold true, and prices may eventually revert to their fundamental values. To determine whether the price or price pattern is right or wrong when comparing two assets (A and B), several criteria can be