Relative Vigor Index

Summary

The RVI is a momentum indicator which aims to identify recent price activity and the likelihood of the activity to continue. It identifies the energy, or vigor, in the market.

The open to close price range is smoothed out by dividing the low to high price range (maximum range), this allows comparison between periods. The recommended number of comparison periods is 10.

Calculation

RVI = (Closing price - Opening price)
(High price - Low price)

The RVI range is from -1 to 1

Signals

Where the range is below zero then it signals a bullish trend as the closing price is lower than the opening price.

In contrast a positive RVI value indicates a bearish trend as the opening price was lower than the closing price.

  • Where the RVI crosses above the zero line (i.e. the value moves from a negative to a positive value) this is a sign of a bullish divergence and hence an indicator to buy.
  • Where the RVI crosses below the zero line it is a sign of a bearish divergence and hence time to sell.