The Ease of Movement indicator is a momentum indicator developed by Richard Arm. This is a volume-based indicator that determines the relationship between the rate of change of a currency pair’s price and its volume. As the name implies, this trading indicator is designed to measure the “ease” of price movement.
What is the Ease of Movement indicator?
The Ease of Movement indicator is an oscillator in the form of a blue curved line that bounces above and below the zero level. A significant positive value above zero indicates that the trend is bullish at a disproportionately low volume. Conversely, a significant negative value below zero indicates that the market is bearish at a disproportionately low volume. This indicator is also used to determine the volume of various assets.
By default, the Ease of Movement indicator is not available in the MT4 terminal, but it can be downloaded for free from any authentic online resource. Installation of the indicator in MT4 is carried out in a standard way.
Ease of Movement Indicator Characteristics
Type of trading platform – MetaTrader 4
Type of indicator – oscillator
Trading time – around the clock
Timeframe – any
Currency pairs – any
How to use the Ease of Momentum Indicator?
When the market is in an uptrend, the Ease of Movement indicator rises above the zero level, indicating that it is quite strong. Conversely, when the market is in a downtrend, the Ease of Movement falls and falls below zero, implying that the seller’s momentum is strong.
Traders can use the Ease of Movement indicator to confirm a breakthrough in the market. That is, they apply the above concept and generate trading signals for the same.
The figure below shows the graph of the USDCHF currency pair on the daily timeframe. With a bullish break in mid-September, the EOM indicator remained above the zero line for two months, indicating a buy signal.
At the end of June, the indicator made a bullish breakdown, which indicates a buy signal.
In August, prices held a significant support area, forming a small lateral range and finally, the price broke through the support, and the EOM indicator – the zero line, gave us a sell signal.
Ease of Movement trading strategy
Although the Ease of Movement indicator can be a standalone indicator on which the trading strategy can be built, we could use a 50 simple moving average to try and trade in the direction of the trend.
Ease of Movement buy strategy
- The EOM line should cross the zero line from bottom to top.
- The price should be above the SMA (50).
- Wait for the bullish bar to complete before entry.
- Place the stop-loss around the swing low area.
- Exit the trade if the EOM line crosses below the zero line.
Ease of Movement sell strategy
- The EOM line should cross the zero line from top to bottom.
- The price should be below the SMA (50).
- Wait for the bearish bar to complete before entry.
- Place the stop-loss around the swing high area.
- Exit the trade if the EOM line crosses above the zero line.
Ease of Movement conclusions
The Ease of Movement indicator combines price with volume to create a momentum indicator based on volume. This indicator is associated with price changes, as it tracks the price of underlying assets. For the most part, traders use this indicator, combining it with other indicators to generate trading signals.
Summing up, we can say that a higher positive value of the EOM indicator indicates a strong uptrend and a positive change in price relative to volume. Conversely, a higher negative value demonstrates a strong downtrend due to an adverse change in price relative to volume.
I would prefer to use the majority of technical indicators such as the Ease of Movement indicator on the 1-hour charts and above. I tend to find that these charts contain less market noise than the lower time frames and thus give more reliable signals for my forex trading strategies. This also means that I spend less time staring at charts and can also set alert notifications to let me know when price has reached certain levels or a particular indicator value has been reached.
The Ease of Movement indicator is just one indicator amongst thousands. I would not build a trading system alone, but rather combine with other technical indicators such as moving averages, Parabolic SAR, Stochastic Oscillator, RSI, ADX and price action analysis.
Of course, every trading system will generate false signals which is why money management is so important. I would personally be implementing sensible money management and only take traders that give me a favorable risk to reward ratio, ideally of at least 1:3. This means that one losing trade does not wipe out consecutive winners.
The methods of implementing the Ease of Movement indicator into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.
Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.
If you would like to practice trading with the Ease of Movement indicator, you can open an account with a forex broker and download a trading platform. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.