Relative Vigor Index
The main point of Relative Vigor Index Technical Indicator (RVI) is that on the bull
market the closing price is, as a rule, higher, than the opening price. It is the other
way round on the bear market. So the idea behind Relative Vigor Index is that the
vigor, or energy, of the move is thus established by where the prices end up at the
close. To normalize the index to the daily trading range, divide the change of price by
the maximum range of prices for the day. To make a more smooth calculation, one
uses Simple Moving Average. 10 is the best period. To avoid probable
ambiguity one
needs to construct a signal line, which is a 4-period symmetrically weighted moving
average of Relative Vigor Index values. The concurrence of lines serves as a signal to
buy or to sell.
Calculation
RVI = (CLOSE-OPEN)/(HIGH-LOW)
Where:
OPEN — is the opening price;
HIGH — is the maximum price;
LOW — is the minimum price;
CLOSE — is the closing price.
