RVI Commodity Trading Technical Analysis & RVI Trading Signals

Developed by John Ehlers

The RVI combines the older concepts of technical analysis with modern digital signal processing theories and filters to create a practical & useful indicator.

The basic principle behind it is simple –

• Commodity Trading Prices tend to close higher than they open in up-trending markets and
• Commodity Trading Prices close lower than they open in down-trending markets.

The momentum (vigor) of the move will therefore established by where the prices end up at the close of the candlestick. The RVI plots two lines the RVI Line and the signal Line.

The RVI index is essentially based on measuring of the average difference between the closing and opening commodity price, & this value is then averaged to the mean daily trading range & then drawn.

This makes the index a responsive oscillator that has quick turning points which are in phase with the commodities trading market cycles of commodity prices.

Commodities Trading Analysis & Generating Trading Signals

The RVI is an oscillator. Basic method of interpreting the index is to use the crossovers of the RVI & the Signal Line. Trading Signals are generated when there is a crossover of the two lines.

Bullish Signals - a buy signal occurs when the RVI crosses above the Signal-Line.

Bearish Signals - a sell signal occurs when the RVI crosses below the Signal-Line.

Buy and sell signals generated using the cross over technique