What is Ease of Movement?
Ease of Movement (EOM) is a volume-based technical indicator developed by Richard W. Schmell. It aims to measure the relationship between price and volume, providing insights into the strength or weakness of a trend. Unlike traditional volume indicators, EOM focuses on the *ease* with which price is moving, rather than just the amount of volume. A high EOM value suggests price is moving easily with volume support, while a low value indicates struggle and potential reversal.
How it Works
EOM is calculated using the formula: (High-Low) / Volume. This results in a value that represents the average price movement per unit of volume. Essentially, it normalizes price range by volume. When price moves significantly with relatively low volume, EOM will be high. Conversely, large volume with small price movement results in a low EOM. The indicator oscillates around zero, with positive values generally indicating an uptrend and negative values a downtrend.
Trading Signals
Bullish Signals: A rising EOM suggests increasing buying pressure and a strengthening uptrend. Look for EOM crossing above zero after a period below. Bearish Signals: A falling EOM indicates weakening buying pressure and a potential downtrend. Watch for EOM crossing below zero after a period above. Divergences between price and EOM can also signal potential reversals – bullish divergence when price makes lower lows but EOM makes higher lows, and vice versa.
Basic Settings
TradingView’s default settings for EOM are generally sufficient. The primary setting is the length (period) used for calculation, typically set to 14. Experimenting with different lengths can help optimize the indicator for specific assets and timeframes. Consider using EOM in conjunction with other indicators, such as moving averages or RSI, for confirmation. Visual customization options include line style, color, and thickness.