Relative index of the force (RVI)
Seeks to establish that the bull market closures were close to the maximum and bear market in the closures will be closer to the minimum of the market. The idea behind the index is that the direction of movement is established by the proximity of where the prices end with respect to their maximum or minimum
To make a calculation using the more smoothed moving average. 10 is the default time. To avoid ambiguity and noise in the market need to build a line of signal in this case consists of half periods of 4, taking into account the RVI The concurrence of the lines or crossing serves as a signal to buy or sell. The only difficulty is that this indicator does not give us absolute areas overbought or oversold therefore these areas will always be related to the values obtained previously by the indicator, minimally we need to review the last two maximum or minimum values for establishing a reference area respect to the values "expensive" or "cheap" to sell and buy respectively.
The tactics we use to interpret their signals is to draw an exclusion zone by two parallel lines equidistant from the midline "0" where it will not take into account the crossing of this indicator within the area and only take into account crossings outside the same as market orders. Then buy when crossing the lines of the indicator is occurring outside and below the lines of exclusion and low when the crossings are outside and above this zone.
