In a simple word, Ease Of Movement (EOM) indicates the relationship between price and Volume. This indicator shows how easily the price can move.
If EOM in high value that means more easily share price movement. When the price is easily moving, it’s the sign of a strong trend.
When EOM indicator Line Oscillate on the positive side. The more High value in the positive side that means, the share price rises more with low volume.similary when EOM Indicator Line oscillates in the Negative Side. The more low value on the negative side that means, the share price can fall more at a low price.
This indicator indicates the strength of the trend. the more easier price trend indicates more strength of price. If this indicator is in high Value then the stock price is rising with low volume. Similarly if the EOM indicator is lower negative side this means stock prices are falling with low volume.
Ease of movement Setting
go to the indicator search section and search for ‘Ease of movement’.
- Period: This will need to calculate this indicator. Here, by default value is 14, this means EOM will oscillate base on 14-period price activities
- Moving average type: By default it’s a Simple moving average, this means, EOM line will Oscillate base on simple moving average. ( Also other types of moving averages available, Simple, exponential, etc types)
- Result: This is the EOM indicator line color.
Ease of movement Trading Strategy
- If this indicator line going upward direction and Cross ‘0’ line. Then going upward direction. This is the buying signal.
- If This indicator line moving downward direction and cross ‘0’ line. Then moving to the downward direction, this is the selling signal
- You can use this indicator with the RSI indicator. So when both indicator give a signal then you can buy or sell a share.
- Also this indicator can be used with the Bollinger band indicator. try to use this with a combination of other indicators. so that false signals will reduce.
Ease of movement indicator relates price with volume. when indicator line above zero line this is a bullish trend. and when indicator line below zero line this is a bearish trend.
*Read Related post for more information.