Range Action Verification Index (RAVI) indicator, developed by Tushar Chande in the late 1990s, attempts to identify trend strength. Tushar Chande in his original implementation uses two simple moving averages for the calculation and takes the absolute value of the result ensuring all values are positive. Doing this, the larger the value of RAVI, the stronger the trend is said to be, however, the trend direction is lost.
This implementation has been enhanced, if configured to do so, to skip the final absolute value calculation, thus preserving trend direction.
Tushar Chande also recommends the following indicative levels: 0.3% or 0.1% (depending on the market). If the value is in excess of this level, then the trend is considered to be strong.
This implementation supports levels natively in the indicator and do not need to be manually added. If the absolute value calculation is disabled, negative levels can be used.
Finally, this implementation also has been enhanced to support exponential moving averages if the user wishes.
- Short MA – The number of periods to use for the short moving average. The default value is 7.
- Long MA – The number of periods to use for the long moving average. The default value is 65.
- Uptrend Level – The level to draw the uptrend indicator line. The default value is 0.3.
- Downtrend Level – The level to draw the downtrend indicator line. The default value is -0.3.
- Use SMA – Use simple moving averages for the calculation. True/yes to use simple moving averages, false/no to use exponential moving averages. The default value is true/yes.
- Absolute Value – Take the absolute value of the result. True/yes to take the absolute value as per the original specification by Tushar Chande. False/no to not perform the absolute value and preserve trend direction. The default value is false.
- Sell when the price crosses under the uptrend level from top to bottom.
- Buy when the price crosses over the downtrend level from bottom to top.
- If the value is positive, we are in uptrend.
- If the value is negative, we are in downtrend.