Relative Measured Volatility (RMV)

The Relative Measured Volatility (RMV) indicator highlights low-volatility and low-volume market periods by normalizing price action into a single squeeze measure to identify consolidation phases.

Usage

The RMV is primarily used to identify "squeezes" or periods of market quietness that often precede significant breakouts. By monitoring the step plot, traders can visualize the relative expansion or contraction of price ranges.

• Spotting Consolidation: When the RMV line falls below the user-defined Tight Threshold, the background is shaded, signaling a consolidation zone.
• Trend Preparation: Sustained low values (marked by small arrows) indicate genuine dry volume and narrow price action, which are ideal for preparing swing entries ahead of a projected move.
• Volatility Normalization: Because the indicator scales values from 0 to 100 based on a lookback period, it allows for a standardized view of volatility regardless of the asset's price level.

Details

The indicator operates by calculating the raw High-Low range of each bar. To emphasize genuine quiet periods, it can down-weight bars based on volume relative to its moving average. The resulting value is normalized against the minimum and maximum ranges found over the prior lookback period (excluding the current bar). This exclusion ensures that a new low in volatility immediately registers as a 0 on the scale.

The normalization formula used is: rmv = 100 * (Current Range - Rolling Min) / (Rolling Max - Rolling Min)

Settings

• Lookback (bars): Sets the number of previous bars used to determine the relative high and low volatility range for normalization.
• Tight Threshold: The RMV value level (0-100) below which a bar is considered to be in a "squeezed" or tight state.
• Volume SMA Period: (If applicable) The period used for the volume moving average benchmark to weigh the price range.

FAQ

How do I interpret the 0-100 scale?

A value of 0 indicates the current price range is the tightest it has been within the lookback period, while 100 indicates it is the most volatile relative to that period.

What does the background shading represent?

The shading appears whenever the RMV value drops below the Tight Threshold, highlighting specific bars that meet your criteria for low-volatility consolidation.

How can I access Relative Measured Volatility (RMV)?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.