What Is the Relative Vigor Index?

The Relative Vigor Index (RVI) is a momentum indicator used in technical analysis. It measures the strength of a trend by comparing a security's closing price to its trading range while smoothing the results using a 澳洲幸运5开奖号码历史查询:simple moving average (SMA).

The RVI's usefulness is based on the observed tendency for prices to close higher than they open during uptrends, and to close lower than they open in downtrends.

The Formula for the Relative Vigor Index (RVI)

𝓀 The RVI formula may look complicated, but it is really fairlඣy intuitive:

$\begin{aligned} &\text{NUMERATOR}=\frac{a+(2\times b)+(2\times c)+d}{6}\\[7pt] &\text{DENOMINATOR}=\frac{e+(2\times f)+(2\times g)+h}{6}\\[7pt] &\text{RVI}=\frac{\text{SMA of NUMERATOR for $N$ periods}}{\text{SMA of DENOMINATOR for $N$ periods}}\\[7pt] &\qquad\text{\ Signal Line }=\frac{\text{RVI}+(2\times i)+(2\times j)+k}{6}\\[7pt] &\textbf{where:}\\ &a = \text{Close}-\text{Open}\\ &b=\text{Close}-\text{Open One Bar Prior to }a\\ &c =\text{Close}-\text{Open One Bar Prior to }b\\ &d =\text{Close}-\text{Open One Bar Prior to }c\\ &e =\text{High}-\text{Low of Bar }a\\ &f =\text{High}-\text{Low of Bar }b\\ &g =\text{High}-\text{Low of Bar }c\\ &h =\text{High}-\text{Low of Bar }d\\ &i = \text{RVI Value One Bar Prior}\\ &j = \text{RVI Value One Bar Prior to }i\\ &k = \text{RVI Value One Bar Prior to }j\\ &N = \text{Minutes/Hours/Days/Weeks/Months} \end{aligned}$​NUMERATOR=6a+(2×b)+(2×c)+d​DENOMINATOR=6e+(2×f)+(2×g)+h​RVI=SMA of DENOMINATOR for N periodsSMA of NUMERATOR for N periods​ Signal Line =6RVI+(2×i)+(2×j)+k​where:a=Close−Openb=Close−Open One Bar Prior to ac=Close−Open One Bar Prior to bd=Close−Open One Bar Prior to ce=High−Low of Bar af=High−Low of Bar bg=High−Low of Bar ch=High−Low of Bar di=RVI Value One Bar Priorj=RVI&nbs🉐p;Value One Bar Pri🏅or to ik=RVI Value One Bar Prior ꦛto jN=Minutes/Hours/Days/Weeks/Months​

How To Calculate the Relative Vigor Index (RVI)

1. Choose an N period to examine.
2. Identify the open, high, low, and close values for the current bar.
3. Identify the open, high, low, and close values for lookback periods prior to the current bar.
4. Calculate SMAs for NUMERATOR and DENOMINATOR over the N period.
5. Divide NUMERATOR value from DENOMINATOR value.
6. Place the result in the signal line equation and plot it on a graph.

▨ What Does the Relative Vigor Index (RVI) Tell You?

The RVI indicator is calculated in a similar fashion to the 澳洲幸运5开奖号码历史查询:stochastics oscillator but it compares the close relative to the open rather than comparing the close relative to the low. Traders expect the RVI value to rise as the bullish trend gains momentum because, in this positive setting, a security's closing price tends to be at the top of the range while the open is near the low of the range. In other words, during an uptrend, prices often close higheജr than they open, while during a downtrend,🍌 prices often close lower than they open.

The RVI is interpreted in the same way as many other oscillators, such as 澳洲幸运5开奖号码历史查询:moving avera💙ge convergence-divergence (MACD) or the 澳洲幸运5开奖号码历史查询:relative strength index (RSI). While oscillator🌞s tend to fluctuate between set levels, they may remain at extreme levels over a prolonged period of time so that interpretation must be u൲ndertaken in a broad context to be actionable.

The RVI is instead a centered 澳洲幸运5开奖号码历史查询:oscillator and not a banded (trend-following) oscillator, which means that it's typically displayed above or below the price chart, moving around a center line rather than the actual price. It's a good idea to use the RVI indicator in conjunction with other forms of 澳洲幸运5开奖号码历史查询:technical analysis in order to find the highest probability outcomes.

Example of How To Use the ဣRelative Vigor Index (RVI)

A trader might examine potential changes in a trend with the RVI indicator by looking for divergences with the current price. The trader would then identify specific entry and exit points with traditional 澳洲幸运5开奖号码历史查询:trendlines and chart patterns.

The two most popular trading signals include:

• RVI Divergences: Divergence between the RVI indicator and price suggests there will be a near-term change in the trend in the direction of the RVI's trend. So, if a stock price is rising and the RVI indicator is falling, it predicts the stock will reverse over the near term.
• RVI Crossovers: Like many oscillators, the RVI has a 澳洲幸运5开奖号码历史查询:signal line that's often calculated with price inputs. A crossover above the signal line is a bullish indicator, while a crossover below the signal line is a bearish indicator. These 澳洲幸运5开奖号码历史查询:crossovers are designed to be leading indicators of future price direction.

The Bottom Line

The Relative Vigor Index (RVI) is a momentum indicator used in technical𝓀 analysis. It smooths out price fluctuations using a simple moving average, which makes trends easier to identไify for traders.

When the RVI indicator and the price of an asset diverge, this suggests that the current price trend is likely to change. As an indicator, it is most useful in trending markets. The Relative Vigor Index may generate false signals in rangebound markets.