RVI Forex Technical Analysis and Relative Vigor Index Forex Trading Signals
Developed by John Ehlers
The Relative Vigor Index 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 –
- Prices tend to close higher than they open in up-trending markets and
- 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 Relative Vigor Index 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 daily trading range and then plotted.
This makes the index a responsive oscillator that has quick turning points that are in phase with the market cycles of prices.
Forex Technical Analysis and Generating Forex Trading Signals
The Relative Vigor Index is an oscillator. The basic method of interpreting the index is to use the crossovers of the RVI and the Signal Line. Signals are generated when the 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 crossover method