Using Relative Vigor Index to trade the cryptocurrency market

Using Relative Vigor Index to trade the cryptocurrency market

By quintomudigo | Teacher forex school | 19 Jul 2019


Relative vigor index is a crossover oscillator indicator created by John Ehlers. Since Relative vigor index is a crossover oscillator indicator, it, therefore, ranges from a negative value to positive value with 0 being the centerline and two crossover lines, the blue line which is the Relative Vigor Index Line and the red line which is the signal line. Therefore, since the Relative Vigor Index is a crossover oscillator indicator, it is therefore based on overbought and oversold market condition when the two-line crosses over. Therefore, the sell or buy signal will take place when there is a crossover at below 0 or at above 0.

      Oversold Market Crossover
For oversold market, the Relative Vigor Index will cross above the signal line at below 0. This will signal the cryptocurrency trader to buy a certain number of a given cryptocurrency and hold them until their price has risen above what they will have previously purchased with.This is indicated as  from the candlesticks chart below;

RVI oversold2.png  

The chart above represents the market for XRP against USDT.
From the candlesticks chart above, there are 3 points. Point A which is blue in color is the Relative Vigor Index while point B which is red line is the signal line. Point C is the crossover point. At point C, the Relative Vigor Index has crossed above the signal line at below 0 thus an indication of an oversold market. This will signal the cryptocurrency trader  to make a buy order of a certain number of XRP and hold them until the price rises in order to increase the value of their account. The cryptocurrency trader can decide to make a buy order using the limit price or the market price.When the order is being executed, the account of the cryptocurrency trader will start increasing in value in terms of USDT.



              Overbought cryptocurrency market crossover

For overbought market, the Relative Vigor Index will cross below the signal line at above 0. This will signal the cryptocurrency trader to sell a certain number of a given holding cryptocurrency which he/she had previously purchased in order to avoid his trading account from declining in value  .This is indicated from the candlesticks chart below;
RVI ,overbought.png

The candlesticks chart above represents the market for XRP against USDT.
From the candle sticks chart above, there are 3 points. Point A which is blue in color is the Relative Vigor Index while point B which is red line is the signal line. Point C is the crossover point. At point C, the Relative Vigor Index has crossed below the signal line at above 80 thus an indication of an overbought market. This will signal the cryptocurrency trader to make a sell order of a certain number of XRP which he had purchased at lower price and was holding. The trader can decide to make a sell order using the limit price or the market price.When the order is being executed, the account of the trader will now have increased in terms of USDT.

Recommendation: Cryptocurrency market is highly volatile. When you place a buy order, make sure to apply risk management to be safer incase your buy order goes against you.      

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quintomudigo
quintomudigo

Trader, Blockchain Technologist and Contentpreneur. Also founder and CEO @ Teacher Forex School.


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