The Relative Vigor Index (RVI) is a technical momentum indicator created by John Ehlers. It is used to show changes in the relative strength of a security or market compared to a previous period and is an oscillator type indicator which means it oscillates or fluctuates back and forth between two extreme values.

The RVI oscillates across a pre-determined centerline with no banded trend. The centre line of RVI is the value 50; this value indicates that the price at the given period was equal to the price from the period before. RVI values of less than 50 denote a price decline associated with the previous period, and RVI values of more than 50 indicate that the recent price is increased as compared to the previous period.

RVI measures the momentum and relative strength by comparing two different bars and their close values, and it is used to identify if a security is overbought or oversold. A divergence between the RVI indicator and price suggests there will be a near-term change in the trend and traders consider it to be a potential buy or sell signal. When the price is making higher highs, but the RVI is making lower highs, it is a sign of a weakening bullish trend. The opposite is true as well, when the price is making lower lows, but the RVI is making higher lows, it is a sign of a weakening bearish trend.

As the RVI moves forward in time, it will attempt to gauge the enthusiasm of buyers and sellers comparable to the prices they are paying or receiving. When this enthusiasm is waning, the RVI will start to move toward its center line in the opposite direction. This divergence between the RVI and price can signal a potential reversal in price movement. The RVI can also be used to confirm a trend if the price action and the RVI move in the same direction.

In conclusion, the Relative Vigor Index (RVI) is a technical momentum indicator used to identify potential reversal points. It oscillates across the pre-determined centerline and divergences between the RVI indicator and price suggest there will be a near-term change in the trend. It is used to measure the momentum and relative strength of two different bars and their close levels and can be used by traders to identify potential buy and sell signals.