RVI Commodities Technical Analysis and Relative Vigor Index Trading Signals

Developed by John Ehlers

The Relative Vigor Index 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 -

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

The momentum (vigor) of the move will therefore established by where the commodities trading prices end up at the close of the candlestick. The Relative Vigor Index 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 commodities price, and 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 commodity market cycles of commodities prices.

Commodities Technical Analysis & Generating Trading Signals

The Relative Vigor Index is an oscillator. Basic method of analyzing the index is to use the crossovers of the RVI & the SignalLine. Trading Signals are generated when there is a cross-over of the 2 lines.

Bullish Signals - a buy commodity signal occurs when the RVI crosses above the Signal Line.

Bearish Signals - a sell commodity signal occurs when the RVI crosses below the Signal Line.

Buy and sell commodity signals generated using the crossover method