Oscilattor: Relative Vigor Index (RVI)

The RVI is based on the idea that in a bull market, the closing price is generally higher than the opening price. He assumes that the vigor of the movement depends on where the candle closed in relation to the trend and the opening price. To make a smoother calculation, the indicator will often use a simple moving average (green line). The red line is the signal line. 
The RVI is useful for trading but may give false signals and should be used in combination with other indicators and trading tools.
How to interpret:
1. Convergence / divergence. If the new price maximum is greater than the previous one and the new RVI maximum is smaller than the previous one (divergence), wait for the RVI to cross the signal line to the upper side and then buy. Similarly, if the new minimum price is below the previous one and the new minimum of the RVI is above the previous one (bearish convergence), wait for the RVI to cross the signal line from top to bottom and then sell.  
2. Conditions of overbought / oversold. If the market is flat, wait for the RVI to exit the overbought (high) or oversold (low) areas for a sell / buy signal. Note that the indicator does not have an overbought or oversold area, so traders should deduct this on their own.

GBPUSDDaily rvi.png


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