Description

• Developed by Richard W Arms, helps in assessing the strength of trend
• It shows the relation of volume and price change. If small volume is moving price up or down easily EoM will also have high extreme values
• It oscillates above and below zero line

Interpretation

• If price are moving in narrow range with high volumes on bar, EoM will hover around zero line.
• If price are moving up easily on low volumes, EoM will have high positive value, showing strong upside trend.
• If price are moving down easily on low volumes, EoM will have high negative value, showing strong downside trend.
• It helps to understand power of volume in price action

Default Parameters Used/Inputs

• High Line
• Low Line
• Qty Line
• Bars

Returns/Output

EO values of stock for the specified period

Formula

EoM = Midpoint Value /Box Ratio where, Midpoint Value = [(High – Low)/2] – [(high-1 – low-1)/2] Box Ratio = (Volume/10000) / (High – Low)