Technical analysis without application of technical indicators and oscillators is not possible. Indicators play a very important role in technical analysis. A technical indicator is a combination of the data points which are obtained by the application of some formulae to the previous price data of any stock and security. In simple words the price data can be termed as the combination of opening, high, low or closing for a certain time interval. Each and every trader should be aware about the importance of technical indicator.
One of the most important technical indicators used in the modern day is Relative Vigor Index (RVI), which help us to measure the current price action and similar price action.
This tool helps technical analyst and traders in getting the accurate price by comparison of closing price with its price range. The solution which is obtained is again resolved by the exponential average of the values.
Its formula is
It can be said as the calculation of RVI and stochastic oscillator both are same, but the minor difference between both of them is vigor index matches the relationship between closing price and opening price. Instead of getting the low prices of the stocks, traders are more eager to wait for RVI value to increase as per the bullish trend expand momentum.
RVI trading signals are further classified such as: -
High value in the indicator always suggest that the product is overbought, where as low value always indicates that the product is over sold.
Entry and exit signals are occurred when the short moving average crosses the long moving average.
RVI help us to create many types of chart such as double bottom, head and shoulders and double tops.
RVI is one of the most leading technical indicators which are being used by most of the traders, as RVI indicators can combine with other technical indicators such as MACD, Stochastic, RSI and Bollinger brands.
The technical analyst implements this technical indicator in order to generate accurate stock future tips.
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