Using the RAVI Indicator and Floating Levels to Identify Trends

Summary

The Range Action Verification Index (RAVI) is described as a trend-identification oscillator based on the percentage difference between fast and slow moving averages. The document gives conventional directional rules: a rising cross above a 3% threshold marks a bull trend, while a falling cross below a 1% threshold marks a bear trend; the trend remains active while the indicator continues moving in that direction. The thresholds may vary with the market, and the moving-average type can be changed.

The extended version adds floating upper, lower, and midpoint levels calculated from the indicator’s recent high-low range. These adaptive levels are intended to help signal short-term reversals or earlier trend changes. Example settings use a 7-period fast average, a 65-period slow average, and a 32-period floating-level window. The document explains indicator construction and interpretation but provides no market-specific validation, backtest, or evidence that its signals are profitable; threshold and parameter choices therefore require evaluation for the intended instrument and timeframe.

Key ideas

• RAVI measures the percentage difference between fast and slow moving averages.
• A rising cross above the stated upper threshold signals a bull trend, while a falling cross below the lower threshold signals a bear trend.
• The extended indicator derives adaptive upper, lower, and midpoint levels from its recent range.
• Moving-average type, periods, floating-level settings, and thresholds can be adjusted.
• The document supplies no performance tests, so the signals require validation for each use case.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.