Description

• This indicator has been developed by Donald Dorsey
• Incase of RVI, it uses standard deviation (SD) as input instead of close price which is used in case of RSI
• As it uses standard deviation, it helps to understand the direction of price movement in which volatility stands

Interpretation

• If RVI is above 60, it indicates that volatility is in favour of upward price movement
• If RVI is below 40, it indicates that volatility is in favour of downward price movement
• RVI being volatility indicator will give good trading signals when used along with other oscillator like RSI, stochastic etc, as they consider price as basic input to give price trend & reversal signal

Default Parameters Used/Inputs

• Price Line
• Bars

Returns/Output

RVI values of stock for the specified period.

Formula

RVI = 100 - (100 / (1 + RV))
where
RV =(Avg_of_n_updays_standard deviation)/(Avg_of_n_downdays_standard deviation)
or
RV = Average positive price change SD / Average Downward Price change SD.