RAVI Trend Detection with Moving Average Divergence
Summary
The Range Action Verification Index (RAVI) uses the relative difference between a long and short moving average to identify trends. The long average is based on 13 weeks, while the short average is about one tenth as long, rounded to seven periods. RAVI scales their difference by a factor of 100. The document describes reference bands around zero: a move above the upper band signals a potential uptrend, and a move below the lower band signals a potential downtrend. A trend is treated as continuing while RAVI moves in its direction. A return to zero suggests the trend has ended, while a reversal before RAVI reaches the band area may indicate that it has resumed.
The text compares RAVI with ADX, the Price Oscillator, and MACD. It says RAVI uses one smoothing stage, making it more responsive than an 18-day ADX with the specified settings. The suggested band widths vary by market, and the document offers no performance tests or evidence that the signals are profitable. It presents indicator rules and background, not a complete trading system.
Key ideas
- RAVI measures the relative divergence between long and short moving averages.
- The described setup uses a 13-week long average and a short average about one tenth as long.
- Crossing the upper or lower reference band marks a possible trend start.
- A move back to zero is treated as a possible end to the trend.
- The document claims RAVI responds sooner than an 18-day ADX under its stated settings, but provides no performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.