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Ease of Movement
The Ease of Movement Indicator was developed to show the link between volume and price change and it demonstrates how much volume is needed for changing prices.
A sell signal occurs when the indicator crosses below zero. Here prices are moving downward more easily. A purchase signal occurs when it crosses above zero. In this case, prices are more easily moving upward.
Low values occur when prices are moving downward on light volume. High Ease of Movement values are produced when prices are moving upward with light volume. In case if prices remain unchangeable or if heavy volume is needed to change prices, the indicator will stay near zero point.
Developed by Richard Arms, Jr., perhaps better known for the Arms Index (TRIN), the formula is as follows:
[ {(H+L)/2} - {(Hp+Lp)/2} ] / [ V/(H-L) ]
Where:
H = Today's high
L = Today's low
Hp = the previous day's high price
Lp = the previous day's low price
V = current day's volume
