RVI Technical Analysis & Relative Vigor Trading Signals

Developed by John Ehler

The RVI combines the older concepts of trading analysis with modern digital signal processing theories and filters to create a practical and useful trading indicator.

The basic principle behind it's simple -

• Prices tend to close higher than they open in up-trending markets and
• Prices close lower than they open in down-trending markets.

The momentum (vigor) of the move will therefore established by where the prices end up at the close of the candlestick. The RVI plots 2 lines the RVI Line & the signal Line.

The RVI index is essentially based on measuring of the average difference between the closing & opening price, & this value is then averaged to the mean daily trading range & then drawn.

This makes the a responsive oscillator that has quick turning points which are in phase with the stock trading market cycles of prices.

Technical Analysis & How to Generate Signals

RVI is an oscillator. The basic technique of interpreting the index is to use the cross-overs of the RVI & the SignalLine. Signals are generated when there is a cross-over of the 2 lines.

Bullish Signals - a buy stock signal occurs when the RVI crosses above the Signal Line.

Bearish Signals - a sell stock signal occurs when the RVI crosses below the Signal Line.

Buy and sell stock signals generated using the crossover method

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