| John Ehlers developed the Relative Vigor Index (RVI) to measure a security's trend strength more accurately than traditional indicators. The RVI is calculated by comparing the closing price to the mid-point of the price range over a specified period. The resulting values are then smoothed using an exponential moving average (EMA) to create the RVI indicator. The indicator oscillates between 0 and 100, with a reading above 50 indicating a bullish trend and below 50 indicating a bearish trend. Traders can use the RVI to identify potential trend reversals and confirm the strength of a current trend. A cross of the RVI and its signal line can also be used as a buy or sell signal. The RVI is similar to the Stochastic Oscillator and the MACD but with some key differences. It is designed to be less sensitive to short-term price fluctuations and to provide a more accurate measurement of trend strength over longer periods. |
