Ease of Movement
The Ease of Movement indicator was developed by Richard W. Arms Jr who also created Equivolume charts.
Ease of Movement values are high when prices move upwards on light volume and low when prices move downwards on light volume. Values around zero indicate that significant volume is required to move the price.
When the indicator crosses above zero this could indicate that prices are moving upwards and can be used as a Buy signal. Likewise when the indicator crosses below zero this could indicate that prices are moving downwards and can be used as a Sell signal.
1. Movement = ((High+ Low) / 2) - ((High[-1] + Low[-1]) / 2)
2. Box Ratio = Volume / (High - Low)
3. Ease of Movement = Distance Moved / Box Ratio * 100000000
A moving average of the Ease of Movement is usually used as a smoothed signal line.