RVI Stocks Technical Analysis and Relative Vigor Index Stocks Signals

Developed by John Ehlers

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

The basic principle behind it is simple –

• Stocks Prices tend to close higher than they open in up-trending markets &
• Stocks 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. Relative Vigor Index plots 2 lines the RVI Line & the signal Line.

The RVI index is essentially based on measuring of the average difference between the closing & opening stocks price, and 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 stocks market cycles of stocks prices.

Stock Technical Analysis & How to Generate Signals

The Relative Vigor Index is an oscillator. Basic method of analyzing the index is to use the cross-overs of the RVI & the Signal-Line. Trading Signals are generated when there is a cross over of the two lines.

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

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

Buy & sell signals generated using the cross over method