Composite & famousRelative Vigor Index · RVI
Momentum read from where price closes versus opens, on the idea that vigour shows in the close.
Works best in trending marketsEngine-computed on a fixed sample series
What the Relative Vigor Index measures
The Relative Vigor Index (RVI) is a momentum oscillator built on a simple market observation: on days when bulls are in charge, prices tend to close higher than they opened, and when bears rule, prices close lower than they opened. The indicator measures the vigor of a move by asking where price finishes each bar relative to where it started, then normalizes that by the bar's total range so a strong close counts more when the day was quiet than when it was wild. It swings around a zero line and is plotted with a companion signal line, making it look and behave much like a MACD-style oscillator. Popularized by engineer and trader John Ehlers, its premise is that the open-to-close relationship reveals conviction that a simple close-to-close change can miss. For a beginner, it is best understood as a gauge of who owned each candle — buyers or sellers — smoothed into a readable line. Note that it is unrelated to Donald Dorsey's Relative Volatility Index, which shares the same RVI abbreviation.
How the RVI is calculated
The raw ingredient each bar is the close minus the open, the numerator, and the high minus the low, the denominator, which represents the full range. Both are smoothed with a symmetric four-bar triangular weighting — the current bar plus twice the previous plus twice the one before plus the one before that, all divided by six — which damps noise without shifting the line off center. Those smoothed numerators and denominators are each summed over the lookback, with 10 periods the default, and the RVI is the summed numerator divided by the summed denominator. The signal line is then a four-bar symmetrically weighted average of the RVI itself, using the same one-two-two-one weighting. The result is two smooth lines oscillating around zero, with the range normalization keeping the output comparable across changing volatility.
Reading the RVI, step by step
Above zero the closes are winning out over the opens across the window — a sign of bullish vigor — and below zero the sellers are dominating each bar's finish. The primary trigger is the crossover: RVI crossing above its signal line is a bullish momentum shift, and crossing below is bearish, exactly analogous to a MACD signal cross. The distance of the RVI from zero conveys the strength of the prevailing vigor, while a flattening line warns that conviction is fading even before the cross. Divergence is the other key read — price making a new high while the RVI makes a lower high signals the closes are no longer confirming the advance, hinting the move is tiring. Because the calculation leans on the open, it is most meaningful on instruments with genuine, meaningful opening prints rather than 24-hour markets where the open is arbitrary.
Best timeframes and settings
The RVI is primarily a swing-trading oscillator and works well on daily and 4-hour charts, where the open-to-close relationship reflects a full session's balance of power. The default lookback of 10 is a good starting point; shortening it makes the crossovers faster and more frequent at the cost of more false signals, while lengthening it smooths the line and delays the turns. It can be dropped to intraday charts, but only where each bar has a reliable open — futures and equities with clear session structure suit it better than spot FX or crypto that trade continuously. The core trade-off mirrors every oscillator: responsiveness versus noise, tuned through the lookback. Because it already carries two layers of symmetric smoothing, pushing the period too high makes it sluggish at real turns.
When and where to use it
The RVI is a trend-friendly oscillator — it measures the vigor of an existing move rather than calling tops and bottoms from scratch, so it performs best when there is a trend whose crossovers you can trade in the prevailing direction. It struggles in flat, sideways markets, where opens and closes alternate almost randomly and the RVI and its signal line tangle together, throwing crossovers with no follow-through. It is well suited to equities, index futures, and commodities with defined sessions and honest opening prices. Avoid leaning on it in choppy consolidations or on instruments where the open is a meaningless carry-over from the prior close. Like MACD, it is a momentum-confirmation tool, strongest when a directional bias is already established.
Strategies that use the RVI
The core strategy trades the RVI and signal-line crossover in the direction of the higher-timeframe trend: in an uptrend, buy when the RVI crosses up through its signal after a pullback, stop below the recent swing low, and exit when it crosses back down or momentum flattens. A zero-line strategy uses RVI crossing above zero as confirmation that closes have decisively taken control, entering long and holding while it stays positive. A divergence strategy marks a price high unconfirmed by an RVI high, then waits for the bearish signal-line cross to trigger a short against the weakening move. Across all three, a trend or moving-average filter is essential to screen out the crossovers that occur while the market is directionless, which are the RVI's main source of losing trades.
Combining the RVI with other indicators
Because the RVI is essentially a momentum confirmer, it pairs best with a trend-defining tool — a moving average, ADX, or the MACD zero line — that tells you when its crossovers are worth taking. Support and resistance levels give its turns a location to react from, and a crossover that coincides with a bounce off support is far stronger than one in open space. Volume confirmation adds conviction, since genuine vigor should be backed by participation. It also complements oscillators built on different inputs; where the stochastic reads the close's position within the range and RSI reads gain versus loss, the RVI reads close versus open, so agreement among them triangulates momentum from three independent angles.
Where the RVI fails
The RVI's Achilles heel is the sideways market, where the constant alternation of small up and down closes drags the oscillator and its signal line into a tangle of meaningless crossovers. Because it measures the vigor of a move already underway, it inherently lags at genuine reversals and will confirm a turn only after it has begun. On continuously traded instruments without a meaningful open — much of spot FX and crypto — the close-minus-open numerator loses its interpretive power, and the whole premise weakens. Traders who take every crossover without a trend filter get chopped up in consolidations. The remedy is to trade its signals only with an established trend and a confirming level, treating the RVI as the timing layer rather than the decision-maker.
A worked example
Consider an index future in a steady uptrend on the daily chart with a 10-period RVI. For several sessions price closes well above its open, so the smoothed numerator stays firmly positive while the range denominator is moderate, holding the RVI comfortably above zero at about +0.35 with the signal line trailing at +0.28. Price then pulls back for three days; the RVI dips toward its signal line but the numerator stays positive, and on the fourth day a strong bullish close pushes the RVI back up through the signal at +0.31 versus +0.29. A trend trader buys that crossover at 4,510, places a stop below the pullback low at 4,470, and rides the resumed advance, exiting when the RVI later crosses back beneath its signal near 4,590. The signal worked because the crossover happened within a clear uptrend, not in a directionless range.