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.