Indicator of freedom of movement, or EOMIt refers to the tools Technical AnalysisWhich demonstrates the need to change the volume of trading price of the asset. This indicator developed analyst Richard Arms. Previously, I noted that not all indicators of volumes can be used alone, in this case the indicator EOM could handle the analysis itself.
Now it is necessary to understand how Binary Options Indicator configure a live graph.
After making the settings, we see that Indicator of freedom of movement It represented as a curve, which shows the numerical values of the indicator. It calculates the ratio of the volume of the asset to the difference between minimum and maximum. To avoid false alarms, added to the moving average with a period 14. The indicator can display both negative and positive values.
Here are signals we can provide Ease of Movement indicator:
- If we see growth rates of the indicator, then the price of the affected small volumes and price change can be expected in the near future;
- If we see a fall in the indicator means to change the prices need significant amounts, and the current trend continues;
- If we see that the indicator moves horizontally at the level of the zero line, it means the market froze in anticipation of large volumes. In this case it is necessary to refrain from opening the option;
- If the freedom of movement crosses mark 0 from the bottom up, you can open an option to increase;
- If the indicator crosses mark 0 from top to bottom, you can open an option on the decline.
This indicator, although a little-known, is very important, as it shows the correlation of volumes with the current value and the balance between buyers and sellers.
Moving indicator will decline when there is a downward trend in the market. When it is in the area of zero level, this indicates that additional volumes and market trends are necessary for the formation of new trends. Without them, it will not be possible to budge the market.
Advantages of the Ease of Movement indicator:
- ease and accessibility in the development and recognition of trading signals.
- high efficiency.
- calculates the ratio of cost and volume for the current specific period of time.
Disadvantages of the Ease of Movement indicator:
- Despite its advantage, this technical indicator is not capable of delivering accurate signals alone. It is better to use it in combination with others. The Relative Strength Index RSI is in perfect harmony with it.
In order to reduce the likelihood of the formation of false signals, experienced pros recommend setting the period to 14 in the settings. When the line on the scale moves too close to zero, then you should refrain from trading, since there is uncertainty and low volatility in the market.