Relative Vigor Index (RVGI) on Gold

What it shows

Green and red lines braid around zero beneath the candles: green is the RVGI, red its short signal. A body can never be longer than its range, so neither line leaves the band from -1 to +1.

How Pravex works it out

1. For each candle, take the body (close minus open) and the range (high minus low).
2. Smooth both with a four-candle weighted average. The weights are 1, 2, 2 and 1, divided by 6, so the newest and oldest candles weigh least.
3. Add up the smoothed bodies over the last 10 candles. Add up the smoothed ranges over the same 10.
4. RVGI = sum of bodies ÷ sum of ranges.
5. Signal = the same 1-2-2-1 average of the last four RVGI values.
6. In round numbers: if the bodies add up to 8 and the ranges to 20, the RVGI is 0.4.

Settings

Setting	Default	What changing it does
Length	10	How many candles of smoothed bodies and ranges are added up. A shorter Length reacts quicker and crosses the red line more often. A longer one is smoother and later.

How traders read it

The idea behind it is that in a rising market candles tend to close near their highs. A line above zero says that has been true over the window. A line below zero says candles have closed near their lows.

Green crossing above red says closes have started to beat opens by more than before; crossing below, by less. The red line is only four values long, so these crosses come thick and fast and need a filter.

Zero is the only line worth marking. Because the ratio uses the body against the range, a long run of small bodies keeps the line near zero even if price drifts.

When it misleads

Only the open and the close of each candle count for the body, so a candle with a long wick and a small body adds little. Gold trades about 23 hours on weekdays with no weekend candles, and the first candle after a gap can open far from the last close, which bends the value for a few candles. In choppy ranges the line crosses the red line many times without a move following.

Questions and answers

Why does a long-wick candle barely move the RVGI?

Only the body, close minus open, goes on top of the ratio. A gold candle that spikes ten dollars and closes near its open adds a big range and a tiny body, which pulls the line toward zero.

Why does the RVGI cross its signal so often?

The red line is a 1-2-2-1 average of just four RVGI values, so it trails by a candle or two. Raising Length smooths the green line itself and cuts the number of crosses.

Is the RVGI the same as the Relative Volatility Index?

No. Both are sometimes shortened to RVI, but the RVGI uses open, close and range, while the Relative Volatility Index uses standard deviation.

RVGI vs Balance of Power?

Both divide the body by the range. Balance of Power draws the raw value of each candle. The RVGI smooths the bodies and ranges first, then adds up 10 of them, which gives a calmer line.

Related: Balance of Power, Fisher Transform, Relative Volatility Index, every indicator.