§5.9 RAVI indicator
First of all, this indicator helps to identify the current market trend. It is also good at identifying the moment that a trend begins which is very crucial for the trend.
What does RAVI look like? In most cases it is created in a separate window below the price chart. In fact, it is displayed as a simple wavy line. It is unique since the line is located against two parallel horizontal straight lines. Its location in relation to these lines at a given period of time allows you to make a judgment about the prospects of the markets movement.
- If the line is above the upper level then it is an uptrend.
- The line is below the lower level then it is a downtrend.
- The line is between the two levels then the market is in the channel.
The most important moments for traders are
The most important moments for traders are the periods when the line crosses the upper or lower levels. For example, when it crosses the upper level then it signals an uptrend; if it crosses the lower level then it signals a decline in prices. If the line “bounces off” the upper level downwards or the lower level upwards then it means that it failed to exit the channel and it will most probably reverse.As a rule, levels are plotted on the 20% and 80% levels on the RAVI indicator’s chart. However, some traders advise to plot them on the 30% and 70% levels. This situation allows a free choice to some degree for the trader to set up the indicator to gain top performance by his own trials and tests.