Relative Volatility Index

What is the Relative Volatility Index?

The Relative Volatility Index (RVI) is Donald Dorsey's 1993 oscillator that applies RSI arithmetic to volatility instead of price change. Each bar, a rolling standard deviation of closes (10 periods in the original article) is assigned to an up bucket if the close rose or a down bucket if it fell; both buckets are smoothed (Dorsey used 14 periods), and RVI is the smoothed up share times 100. The result oscillates between 0 and 100, with readings above 50 meaning volatility is being generated on up-closes.

Dorsey designed it as a confirmation tool, not a standalone signal: the 50 line marks whether volatility favors buyers or sellers, and his published rules only allowed trades in the direction RVI endorsed, with outer thresholds governing missed entries and exits. His 1995 refinement ran the calculation on highs and lows separately and averaged the two. Note the naming collision: the Relative Vigor Index shares the RVI abbreviation but is a different indicator entirely.

How traders use it

• As a confirmation gate: momentum or trend entries are taken only when RVI agrees, above 50 for longs and below 50 for shorts, filtering out signals that lack volatility support.
• As a divergence tool: RVI making lower highs while price makes higher highs is read as bearish divergence in the volatility backing the move, and the bullish mirror applies at lows.
• As a companion to RSI: RSI tracks the direction of price change, RVI tracks the direction of volatility, and agreement between the two is treated as a stronger overbought/oversold read than either gives alone.