RVI Stock Indices Analysis & RVI Signals

Developed by John Ehlers

The RVI combines the older concepts of technical analysis with modern digital signal processing theories and filters to create a practical & useful indicator.

The basic principle behind it is simple -

• Prices tend to close higher than they open in up-trending markets &
• Prices close lower than they open in down-trending markets.

The momentum (vigor) of the move will therefore established by where the prices end up at the close of the candlestick. The RVI plots two lines the RVI Line and the signal Line.

The RVI index is essentially based on measuring of the average difference between the closing & opening price, & this value is then averaged to the mean daily trading range & then drawn.

This makes the index a responsive oscillator that has quick turning points which are in phase with the market cycles of stock index prices.

Indices Analysis & Generating Stock Indices Signals

The RVI is an oscillator. Basic technique of analyzing the index is to use the cross-overs of the RVI & the Signal Line. Trading Signals are generated when the there is a cross-over of the two lines.

Bullish Signals - a buy signal forms when the RVI crosses above the SignalLine.

Bearish Signals - a sell signal forms when the RVI crosses below the SignalLine.

Buy & sell signals generated using the cross over method