Relative Vigor Index( RVI)

Relative Vigor Index( RVI) was developed by John Ehlers.
Relative Vigor Index( RVI) is a technical indicator that measures the strength of a trend by comparing a security's closing price to its trading range and smoothing the result.
this indicator is normally based on the tendency for prices to close higher than they open in uptrend and to close lower than they open in downtrend.
the oscillator is at center 0.00 thus the RVI points are displayed above or below 0.00 oscillation.


Relative Vigor Index( RVI) is calculated using the following formula;

   RVI= (close-open)/(high-low)

where ;
    close is opening price
     open is opening price
     high is highest price
      low is lowest price

Relative Vigor Index( RVI) is composed of two crossover line;
the red and the green line.when the market is bearish,the two lines will be seen moving downwards while when the bearish market reaches its maximum point,the two line will cross over thus signaling a reversal of a bullish market.if the two lines crossover at oscillation below 0 it signals the trader to enter a buy position since the market will start moving upwards.when the market is bullish,the two lines will be seen moving upwards while when the bullish market reaches its maximum point,the two lines will cross over thus signaling a reversal of a bearish market.when the two lines crossover at oscillation above 0,it signals the trader to enter a sell position since the market will start moving downwards.this is indicated as in the candle stick chart below;


from the candle stick chart above the relative vigor index is indicated by the two crossover red and green line as indicated by the two big red arrows.the crossover point for the red and green line of the RVI as represented by the two small arrows are 0.092 and 0.052.there are two points,point a and point b.at point a  as seen from the RVI there is reversal of the market from bullish to bearish since at that point,the red and the green line are crossing over above 0 oscillation thus the two lines have started moving downwards as indicated by the downwards red arrow thus signaling the trader to enter a sell position..at point b as seen from the RVI there is reversal of the market from bearish to bullish since at that point,the red and the green line are crossing over below 0 oscillation thus the two line have started moving upwards as indicated by the upwards red arrow thus signaling the trader to enter a buy position.

Recommendation:if you are a day trader just use 1min,5min,15min and 30min timeframe while if you are swing trader just use 1hour and above time frame if you want relative vigor index indicator to work well for you






Comments

Post a Comment

Popular posts from this blog

MA cross

Image
MA cross is a trading indicator that is used to filter out noise from the price chart. MA cross can also be used by a trader to know the direction in which the price is moving. MA cross indicator is a trend indicator. MA cross is based on the crossover. Based on the crossover, MA cross has two moving average, the shorter term moving average and the longer term moving average. The shorter-term moving average is normally red in color and it represents the price while the longer term moving average is normally blue in color and it represents the moving average. Therefore, since MA cross is based on the crossover, it, therefore, follows that when the short term moving average crosses above the long-term moving average that will be an indication of an upward market movement thus the trader should be trading upwards. On the other hand, when the short term moving average crosses below the long-term moving average that will be an indication of a downward market thus the trader should b
Read more

coppock curve

Image
Coppock curve indicator was created by Edwin Sedge Coppock. The coppock curve is a momentum indicator that was mainly created to determine the buy entry in the stock market.Beside buy entry for stock sell signal can also be identify though not recommended. Coppock curve has 3 period,that is 10 period,14 period and 11 period. Coppock curve is an momentum oscillator and therefore has an oscillation at point 0.0000. Coppock curve is therefore calculated using the following formula which is based on the 3 periods; Coppock curve =( WMA of 10period) of (14 period ROC+11period ROC) Where as; WMA is Weight Moving Average; ROC is Rate Of Change indicator; Since coppock curve has an oscillation at point 0,it therefore follows that when the coppock curve falls below 0.000 that will be an indication that the market has become an oversold market thus the trader should close any sell position and enter a buy position.On the other hand though not recommendable ,when the coppock curv
Read more

Least Square Moving Average(LSMA)

Image
Least square moving average is also called linear regression moving average. Least square moving average is a trend following indicator. Just like in other moving average indicators, least square moving average is also used to indicate the direction of the market, that is whether the market is trending upwards or downwards. Least square moving average is based on bullish and bearish market as well as support and resistance. Least square moving average is therefore calculated using the following formula; LSMA= h*t+b  where as h={(n Σt i x i ) -  ( Σt i Σx i )}/{(n Σt i ) - ( Σt i Σt i )} b=1/n Σx i -h*1/n Σt i while t is the time and n is the period Since least square moving average is a trend following indicator and is based on bullish and bearish, it therefore follows that when the market is in an uptrend movement,the least square moving average will also be moving upwards while when the market is in a downward trend, the least square moving average will also be
Read more