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Relative Vigor Index

Introduction to Relative Vigor Index Technical Indicator (RVI)

Section titled “Introduction to Relative Vigor Index Technical Indicator (RVI)”

The Relative Vigor Index (RVI) is a technical indicator that helps identify the strength and direction of a market trend. It focuses on the relationship between closing and opening prices, with higher closing prices indicating a bullish market and lower closing prices indicating a bearish market.

Calculating the Relative Vigor Index

Section titled “Calculating the Relative Vigor Index”

To calculate the RVI, the change in price is divided by the maximum price range for the day, normalizing the index to the daily trading range. A Simple Moving Average (SMA) is then applied to create a smoother calculation. The recommended period for the SMA is 10.

Signal Line Construction

Section titled “Signal Line Construction”

To avoid ambiguity, a signal line is constructed using a 4-period symmetrically weighted moving average of the RVI values. The signal line helps identify buy or sell signals when it coincides with the RVI line.