Vortex Indicator (VI)

The Vortex Indicator (VI) is a technical indicator that uses the difference between two moving averages to identify potential reversals in the price of a security. The VI is calculated by subtracting the 10-period Simple Moving Average (SMA) from the 20-period SMA. The resulting value is then plotted on a chart, and traders can use it to identify potential trading opportunities.

The VI can be used to identify potential reversals in both uptrends and downtrends. When the VI is above zero, it indicates that the market is in an uptrend. When the VI is below zero, it indicates that the market is in a downtrend.

The VI can also be used to identify potential divergences. A divergence occurs when the VI moves in the opposite direction of the price of the security. A bullish divergence occurs when the VI makes a lower low while the price of the security makes a higher low. A bearish divergence occurs when the VI makes a higher high while the price of the security makes a lower high.

Divergences can be used to identify potential reversals in the price of a security. However, it is important to note that divergences are not always reliable, and traders should use them in conjunction with other technical indicators and fundamental analysis.

The VI is a relatively simple indicator to use, and it can be a useful tool for identifying potential trading opportunities. However, it is important to remember that the VI is not always reliable, and traders should use it in conjunction with other technical indicators and fundamental analysis.