Relative vigor index: analysing trend conviction through price closes

What is the relative vigor index?

The relative vigor index (RVI) is a momentum oscillator that compares closing prices with opening prices to assess trend conviction. Developed by John Ehlers and first introduced in the January 2002 edition of Technical Analysis of Stocks and Commodities magazine, and later expanded in Cybernetic Analysis for Stocks and Futures, the RVI is based on a simple observation: in an uptrend, prices tend to close higher than they open; in a downtrend, they tend to close lower.

The RVI quantifies this relationship and smooths it over time, producing an oscillator that moves above and below a zero line. Readings above zero indicate that prices are closing, on balance, above their opens, which may suggest bullish conviction. Readings below zero indicate that prices are closing below their opens more often, which may suggest bearish conviction.

The indicator also includes a signal line, which is a shorter smoothed version of the RVI. Crossovers between the RVI line and the signal line are commonly used as trading signals. In that sense, the RVI is structurally similar to MACD, although its calculation and underlying logic differ.

How is the relative vigor index calculated?

The RVI uses symmetric weighted smoothing to reduce short-term noise while preserving the close-open relationship that underpins the indicator.

The formula

The RVI calculation applies a symmetrically weighted moving average (SWMA) to the numerator and denominator separately. The default lookback period is 10 candles.

The SWMA applies a 4-candle symmetric weight:

Here, a is the current candle, b is one candle ago, c is two candles ago, and d is three candles ago.

Worked example

Suppose a daily candle has the following values:

The close-open value is +2.50, showing that the candle closed above the open. The range is 3.50. These values are then fed into the SWMA with the three preceding candles to produce the smoothed numerator and denominator. After 10 periods of smoothing and averaging, if the mean close-open SWMA is +1.20 and the mean range SWMA is 2.80, then:

A positive value indicates that, on average over the lookback period, candles are closing above their opening prices

Using the relative vigor index on a price chart

The RVI appears in a sub-panel below the price chart. It usually contains two lines: the RVI line and the signal line. Both move above and below zero. The zero line acts as the trend divider. Crossovers between the RVI and signal line provide the primary trading signals, while moves above or below zero help traders assess broader momentum bias. Unlike RSI, which often uses fixed 30 and 70 levels, the RVI does not have standard overbought or oversold thresholds. Traders usually interpret it through direction, crossovers, zero-line positioning, and divergence from price.

Past performance is not a reliable indicator of future results.

How the relative vigor index works in trading

The RVI gives traders three main reference points: the zero line, the signal line crossover, and the zero-line crossover. Each offers a different balance between sensitivity and confirmation.

The zero line: determining trend bias

When the RVI is above zero, prices have been closing above their opens more often over the lookback period, suggesting bullish conviction. When the RVI is below zero, prices have been closing below their opens more often, suggesting bearish conviction. Sustained periods above zero may support a long-side interpretation, while sustained periods below zero may support a short-side interpretation. Zero-line crossovers occur less often than signal-line crossovers, but they can represent more meaningful shifts in momentum and may be used as a longer-term trend filter.

Signal line crossover: the primary entry signal

The most widely used RVI signal is the crossover between the RVI line and its signal line.

A bullish crossover occurs when the RVI crosses above the signal line, suggesting that upward momentum may be increasing. A bearish crossover occurs when the RVI crosses below the signal line, suggesting that downward momentum may be increasing. Because the signal line is a short SWMA of the RVI itself, crossovers can occur frequently in choppy conditions. Traders often filter these signals by considering the zero line. A bullish crossover above zero generally carries more context than one well below zero. Conversely, a bearish crossover below zero generally carries more context than one above zero, because it aligns with the broader momentum bias.

Zero-line crossover: trend confirmation

When the RVI crosses above zero from below, it signals that the average close-open relationship has shifted from bearish to bullish. This offers broader momentum confirmation than a signal-line crossover alone. Traders may use this crossover as a secondary confirmation or as a trend filter. For example, they may look only for bullish signal-line crossovers when the RVI is already above zero, or they may wait for the zero-line cross itself before considering a setup. The same logic applies in reverse when the RVI crosses below zero.

Past performance is not a reliable indicator of future results.

Best relative vigor index settings for different trading styles

Adjusting the RVI’s lookback period changes the balance between responsiveness and signal reliability. Shorter settings react more quickly but produce more noise. Longer settings smooth out noise but respond more slowly.

Standard 10-period setting

The 10-period default is commonly used for daily chart swing trading. It provides enough smoothing to reduce noise while remaining responsive to meaningful momentum changes. For many intermediate-term trend-following setups, the 10-period RVI with the built-in 4-candle SWMA signal line is a practical starting point.

Shorter period: 5–7 periods

Reducing the period to five or seven makes the RVI more reactive on one-hour or four-hour charts. Shorter settings produce more crossovers, increasing both the frequency of signals and the likelihood of false positives. Intraday traders using shorter settings may apply additional filters, such as requiring the crossover to occur above or below zero, or checking whether price has also crossed a moving average.

Longer period: 14–20 periods

Extending the period to 14 or 20 may suit weekly chart analysis or longer-term position trading. A longer period smooths short-term noise and produces fewer signals, which may align more clearly with broader trend direction. The trade-off is delay. By the time the RVI confirms a trend on a 20-period setting, a significant part of the move may already have occurred. Testing settings on a demo account can help traders assess how the indicator behaves across different instruments and timeframes without risking capital.

Core relative vigor index trading strategies

The RVI’s crossover signals and zero-line positioning support several trading approaches, from trend-following filters to divergence-based analysis.

• Signal-line crossover with zero-line filter: traders may look for long-side setups when the RVI is above zero and crosses above its signal line, or short-side setups when the RVI is below zero and crosses below its signal line. This can help reduce false signals in choppy markets.
• Zero-line crossover trend entry: some traders wait for the RVI to cross the zero line before considering a setup. A move above zero may suggest stronger bullish momentum, while a move below zero may suggest stronger bearish momentum. This approach produces fewer signals, but may help filter out short-term noise.
• RVI divergence: divergence happens when price and the RVI move in opposite directions. Bullish divergence forms when price makes a lower low while the RVI makes a higher low. Bearish divergence forms when price makes a higher high while the RVI makes a lower high. Traders often wait for a signal-line crossover or price structure break before treating divergence as confirmation.*
• RVI with a moving average trend filter: traders may use a 20-period or 50-period exponential moving average to filter RVI signals. For example, they may focus on bullish RVI crossovers when price is above a rising moving average, or bearish crossovers when price is below a falling moving average.
• Relative overbought or oversold readings: the RVI has no fixed overbought or oversold levels. Instead, traders may compare current readings with the instrument’s historical range. For example, if the RVI rarely moves above +0.60, a reading of +0.80 may be considered elevated for that market.
• Risk management: stop-loss orders are often placed beyond the relevant swing point, such as below a recent swing low for long-side setups or above a recent swing high for short-side setups. Stop-loss orders aren’t guaranteed. Guaranteed stop-loss orders incur a fee if activated.
• Confirmation: RVI signals tend to carry more weight when supported by trend structure, price levels or another indicator. Using any RVI signal as a standalone trigger can increase exposure to false entries, especially in choppy conditions. Past performance isn’t a reliable indicator of future results.

*Divergence does not guarantee a reversal. In a strong trend, RVI divergence can persist for many candles before a reversal occurs – or price may continue without reversing at all. Treat divergence as a warning signal, not a trigger, until confirmed by a crossover or price structure break.

Combining the relative vigor index with other indicators

The RVI is generally more useful when its momentum and crossover signals are placed in context. Other indicators can provide trend direction, overbought or oversold context, or additional confirmation.

The RVI produces more useful analytical context when it is not working alone. Pairing it with a complementary tool – whether for directional context, overbought/oversold confirmation, or additional momentum validation – can reduce the risk of acting on crossovers that may not hold up in isolation.

Risk management with the relative vigor index

• The RVI can help traders assess whether momentum is strengthening, weakening, or shifting.
• It shouldn’t replace a defined risk plan, but it can support stop placement, signal filtering and position sizing.
• For signal-line crossover entries, traders often place stop-losses near the swing low before a long setup, or the swing high before a short setup.
• For zero-line crossover entries, stops may be placed below the last significant low before an upside cross, or above the last significant high before a downside cross.
• Stop-loss orders aren’t guaranteed. Guaranteed stop-loss orders incur a fee if activated.
• The RVI tends to be more useful in trending markets.
• In ranging markets, the RVI can move around the zero line and create frequent conflicting signals.
• Before acting on an RVI crossover, traders may check whether price is forming higher highs and higher lows, or lower highs and lower lows.
• If price is moving sideways, RVI crossovers are usually treated with caution until a breakout gives a clearer direction.
• Signal quality can vary. A bullish crossover above zero, with price above a rising moving average, may carry more context than a crossover near zero in a flat market.
• Some traders scale position size according to signal quality, using smaller positions for weaker setups and larger positions only when several conditions align.
• Traders should avoid risking more than they can afford to lose on any single trade.
• In strong trends, the RVI can stay above or below zero for long periods.
• Extreme RVI readings shouldn’t be used against the trend without further evidence, such as a break in price structure, swing highs, swing lows or trendlines.

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