Ease of movement oscillator construction

What the oscillator is meant to show

Ease of movement is constructed as an oscillator meant to show the direction in which a stock or commodity is traveling with the least resistance.

The ease-of-movement oscillator is a 13-day moving average of the daily ease-of-movement values.

Midpoint movement from two bars

Midpoint movement is the change from the prior bar’s high-low midpoint to the current bar’s high-low midpoint. It equals the current bar’s high-low midpoint minus the prior bar’s high-low midpoint.

A prior high and low of 32 and 31 with a current high and low of 34 and 32 produce a midpoint movement of 1.5.

The Equivolume-style box and the box ratio

An Equivolume-style box is a bar representation whose height is the high-to-low range and whose width is volume, after both quantities are converted into chosen units. Volume supplies the width. The day’s high-to-low range supplies the height.

The box ratio is volume units divided by range units on that box.

A volume unit is a chosen share increment used to convert raw volume into box width. If 10,000 shares equal one volume unit, a 55,000-share session contributes 5.5 volume units.

A range unit is a chosen price increment used to convert the high-low span into box height. If one-eighth of a point equals one range unit, a high of 24 and a low of 23 and one-eighth produce 7 range units.

Daily ease of movement

Ease of movement is midpoint movement divided by the box ratio.

With a midpoint movement of 1.5, 5.5 volume units, and 7 range units, 1.5 divided by the quantity 5.5 divided by 7 equals 1.91.

The 13-day moving-average oscillator

The ease-of-movement oscillator is a 13-day moving average of the daily ease-of-movement values.

That moving average is a fixed-lookback average of ordered ease-of-movement observations and supplies the oscillator output.