Technical indicators and oscillators are essential for technical analysis of stock. Technical analysis is incomplete without the use of indicators and oscillators. Technically, an indicator is a sequence of data points that are created by applying certain formulae to previous price data for any stock or security. Price data can be further broken down into the following simple terms: any combination of open-high, low, low, or close for a certain period. Every trader should be aware of the significance of this indicator.
The relative vigor indicator is one of the most important technical indicators. It is used to measure the price action and the price action that will follow. RVI is the abbreviation of relative vigor indicator. Technical analysts use RVI. Technical analysts and traders can also use RVI to abstract accurate price. This is done by comparing closing stock price with its price range. Further smoothing is achieved by finding the exponential moving average between the values. Below is the formula used by technical analysts to calculate RVI.
The RVI indicator works in a similar way to stochastic oscillator. However, the vigor index matches closing price to open and not compares or matches it with the stock’s low price. Traders are eagerly awaiting the RVI value rising as the bullish trend gains momentum.
There are many different types of signals for trading I/O. Below are some of the most popular.
The indicator’s low value indicates an oversold market, while the indicator’s high value indicates an overbought or overpriced market.
If the short moving average crosses over the long moving average, then entry and exit signals were received.
RVI can plot many formations on the chart, including double bottoms and head and shoulders.
RVI is one the most important technical indicators. RVI can be used in combination with other technical indicators to gain more privileges, such as MACD, Stochastic and RSI, Bollinger bands, and MACD.