Ease of Movement (EOM) Indicator Explained : Price Analyses

Ease of Movement (EOM) Indicator Explained

The ease of movement (EOM) is a volume indicator that shows you how freely prices are moving in a given direction. As an oscillator, the EOM moves above and below its zero line. When the EOM is above its zero line, prices move freely upwards, while when the EOM is below the zero line, prices are in a decline.

ease of movement indicator

How to use the Ease of Movement (EOM)

Ease of movement shows the relationship between prices and volume. As volume typically leads price, a high EOM would be considered a bullish signal that could lead to higher highs in the future. While a low EOM could signify that a bearish divergence is about to take place.

The other way you can use the EOM is by helping you time and position your trades. Seeing a high EOM reading would give credit to going long on a position, as if prices are able to continue to move freely upwards then it’s expected to continue over the short-term.

Using the Ease of Movement (EOM) with other indicators

Although a useful tool, the EOM is typically paired with other indicators to see the full picture of a security’s performance. The EOM is best paired with other technical events such as divergences, moving average cross-overs and momentum-based signals generated by indicators such as the RSI or MACD.

When paired with these events, one can better see the relationship between price and volume and whether a price pattern, divergence or cross-over is likely to complete. A high EOM in these cases would signal that a bullish signal is more likely to form than to generate a whipsaw, while a low EOM would give credit to bearish characteristics as the security lacks the volume required to consolidate or take on an entirely different, bullish variety of price action.

Matthew North

I have a passion for trading, behavioral finance, technology, travel, and writing. Contact: matthew@priceanalyses.com.

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