RVI Technical Analysis & RVI Signals

Developed by John Ehler

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

The basic principle behind it is simple -

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

The energy (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 price, and this value is then averaged to the mean average daily range & then drawn.

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

Technical Analysis & Generating Signals

The RVI is an oscillator. Basic method of interpreting the index is to use the cross-overs of the RVI & the SignalLine. The Signals are derived and generated when the there is a crossover of the 2 lines.

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

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

Buy & sell signals derived and generated using the cross over method

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