Relative Vigor Index indicator or RVI is an oscillator which is mainly based on the concept that prices tend to close higher than they open in uptrends and close lower than they open in downtrends. Basically, it is an oscillator that is in phase with the cycle of the underlying’s price. This is a centred oscillator rather than a banded oscillator. It mainly means that it’s typically displayed above or below the price chart and moves around a centre line rather than the actual price.
The traders can know more about the RVI indicator, then they can find it in the STUDIES section of Zerodha Kite. The Relative Vigor Index indicator also available in Kite mobile App. The Period is 10 and you can set the value of it high and low. In this indicator on to any charts likes daily, weekly, monthly or intraday you can attach. You can also check how we attached the RVI indicator in Reliance Industries share price chart.
Calculation of Relative Vigor Index Indicator :
RVI = (CLOSE – OPEN) / (HIGH – LOW).
OPEN – is the opening price.
HIGH – is the maximum price.
LOW – is the minimum price.
CLOSE – is the closing price.
The two most popular trading signals include of Relative Vigor Index (RVI) :
- Divergences of RVI – The divergence between the RVI indicator and the price could suggest that there will be a near term change in the trend in the direction of the RVI’s trend. In an example, if a stock price is rising and the Relative Vigor Index indicator is falling, it’s an indicator that the stock may see a bearish reversal over the near term.
- Crossovers of (RVI) – In this indicator has a signal line that’s often calculated along with the actual price calculations (above). A crossover of RVI above the signal line is a bullish indicator, while a crossover below the signal line is a bearish indicator. These crossovers are designed to be leading indicators of future price action.
The Relative Vigor Index Indicator classified as an “oscillator” since the values fluctuate between computed positive and negative values. In the bull market when the closing price is higher, than this is the opening price. It is the other way round on the bear market. This RVI indicator is normalize the index to the daily trading range, divide the change of price by the maximum range of prices for the day. In RVI indicator, concurrence of lines serves as a signal to buy or sell.
Categories: Technical Indicators