RVI Technical Analysis & Relative Vigor Trading Signals

Developed and Created by John Ehler

The RVI takes old trading ideas and mixes them with new digital signal processing theories and filters to make a trading indicator that is useful and realistic.

The basic principle behind it is simple -

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

So, how strong the move is will be shown by where prices end up when the candlestick closes. The RVI shows 2 lines, the RVI Line and the trade signal Line.

The RVI index fundamentally measures the average difference between closing and opening prices, which is then averaged against the typical daily trading range and subsequently plotted.

It acts as a quick oscillator. Turning points match stock price cycles.

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 derived/generated when there is a cross-over of the 2 lines.

A buy stock signal hits when RVI crosses over the signal line.

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

Buy and sell stock signals derived/generated using the crossover method

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