A trader might examine potential changes in a trend with the RVI indicator by looking for divergences with the current price and then identifying specific entry and exit points with traditional trendlines and chart patterns.

The two most popular trading signals include:

  • RVI Divergences: Divergence between the RVI indicator and price suggests there will be a near-term change in the trend in the direction of the RVI’s trend. So, if a stock price is rising and the RVI indicator is falling, it predicts the stock will reverse over the near term.
  • RVI Crossovers: Like many oscillators, the RVI has a signal line that’s often calculated with price inputs. A crossover above the signal line is a bullish indicator, while a crossover below the signal line is a bearish indicator. These crossovers are designed to be leading indicators of future price direction.1

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