The RVI indicator is calculated in a similar fashion to the stochastics oscillator but it compares the close relative to the open rather than comparing the close relative to the low. Traders expect the RVI value to rise as the bullish trend gains momentum because, in this positive setting, a security’s closing price tends to be at the top of the range while the open is near the low of the range.
The RVI is interpreted in the same way as many other oscillators, such as moving average convergence-divergence (MACD) or the relative strength index (RSI). While oscillators tend to fluctuate between set levels, they may remain at extreme levels over a prolonged period of time so that interpretation must be undertaken in a broad context to be actionable.
The RVI is instead a centered oscillator and not a banded (trend-following) oscillator, which means that it’s typically displayed above or below the price chart, moving around a center line rather than the actual price. It’s a good idea to use the RVI indicator in conjunction with other forms of technical analysis in order to find the highest probability outcomes.1
Trading View. “Relative Vigor Index.”