Relative Vigor Index (RVGI)

The Relative Vigor Index (RVGI) compares where candles close with where they open, against how much they range: in a rising market candles tend to close above their open, in a falling one below. It is drawn in its own pane around a zero line and stays between −1 and +1, mostly within a few tenths of zero. John Ehlers published it in 2002.

What it shows#

• RVI — the main line, in its own pane. Above zero the last bars closed above their opens on balance (buyers finished the bars), below zero they closed below; rising means that bias is growing.
• Signal — a four-bar weighted average of the RVI. It lags by a bar or two, so the lines cross a little after each turn.
• Zero — a dotted level at 0. Values are shown with three decimals, because the lines cross within hundredths.

How it is calculated#

For each bar the engine takes close − open and high − low, smooths both with Ehlers' symmetric four-bar weighting (1, 2, 2, 1, divided by 6) and sums each over the Length (10 bars). The RVI is the first sum divided by the second: the net close-to-open movement as a fraction of the total range. The Signal is the same four-bar weighting applied to the RVI. The indicator always uses the open, high, low and close; it has no source setting.

How traders use it#

• RVI crossing above its signal line is read as a bullish turn, crossing below as a bearish one; the crossings are frequent, so most traders take only those that agree with a longer timeframe's trend.
• Above zero supports a long bias, below zero a short bias; a cross of zero is a slower, cleaner confirmation.
• A higher high in price with a lower high in the RVI (or the reverse) is a divergence that warns the move is tiring.
• A longer Length gives fewer and later crossings.
• Watch out for: in a sideways market the two lines wind around each other and cross constantly, and a gap between one candle's close and the next open does not enter the calculation, since only the body and the range of each bar count.

Settings#

Example on gold#

Say gold has pulled back from $4,350 to $4,280 over a week of small daily candles and the RVI has drifted just below zero. The next three candles close near their highs; the RVI turns up and crosses above its signal line while still below zero. For example, a trader who expects the larger uptrend to continue could treat that cross as the first sign the pullback is over, and wait for a cross above zero before adding size. A fresh cross back below the signal line, or candles closing near their lows, would invalidate the idea.

Add it to your chart#

1. Click Indicators in the top strip (on the Pro screen you can press I).
2. Type rvgi and click the indicator.
3. Click its chip in the legend to open the Inspector and change the settings; drag the chip to reorder; the dot hides it; × removes it.

Related#

• Balance of Power — the same close-minus-open idea, one bar at a time
• Fisher Transform — Ehlers' other oscillator, built from the position of price in its range
• Stochastic — where the close sits in the range of the last bars
• Alerts — an alert when the value crosses a level
• Adding and tuning indicators