Relative Vigor Index (RVI)


The Relative Vigor Index (RVI) is an oscillator based on the concept that prices tend to close higher than they open in up trends and close lower than they open in down trends. Basically, it is an oscillator that is in phase with the cycle of the underlying’s price.

Chart 1: Relative Vigor Index (RVI)

Divergence between the RVI and the price action may signal a change in trend.

Chart 2: Relative Vigor Index (RVI)

In up trends potential buy opportunities occur when the RVI crosses above its signal line.

Chart 3: Relative Vigor Index (RVI)

In down trends potential short sale opportunities occur when the RVI crosses below its signal line.

RVI Calculation bar a = Close – Open bar b = Close – Open one bar prior to a bar c = Close – Open one bar prior to b bar d = Close – Open one bar prior to c numerator = [ a + (2 * b) + (2 * c) + d ] / 6

e = High – Low of bar a f = High – Low of bar b g = High – Low of bar c h = High – Low of bar d denominator = [ e + (2 * f) + (2 * g) + h ] / 6

RVI = SMA of numerator for period selected / SMA of denominator for period selected

Signal Line Calculation i = RVI value one bar prior j = RVI value one bar prior to i k = RVI value one bar prior to j

Signal Line = [ RVI + (2 * i) + (2 * j) + k] / 6

Technical analysis focuses on market action — specifically, volume and price. Technical analysis is only one approach to analyzing stocks. When considering which stocks to buy or sell, you should use the approach that you're most comfortable with. As with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. Past performance is no guarantee of future results.