Easy Trading Tips – The Ease of Movement oscillator shows a unique relationship between price change and volume. The Ease of Movement oscillator rises when prices are trending upwards under low volume, and likewise, the Ease of Movement oscillator falls when prices are trending downwards under low volume.
- It’s a volume based oscillator.
- EMO designed to measure the relationship between price and volume and display that relationship as an oscillator that fluctuates between positive and negative values.
- The EOM fluctuates above and below a Zero Line. This is done in order to quantify the “ease” of price movements.
- When the EOM is in positive territory, prices are advancing with relative ease.
- When the EOM is negative, prices are declining with relative ease.
- When EMV crosses above the zero line and volume must increase
- Bearish cross of the EMV below zero with increased volume, we use this as an opportunity to exit our long position and get short
- Use of moving averages is a classic method for exiting trades
- Avoid EMV signals during periods of low volume.