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The Chande's Range Action Verification Index (RAVI) indicator was developed by Tushar Chande. As the ADX indicator, the RAVI is used to identify whether a market or security is trending. The RAVI indicator is calculated using moving averages of different lengths. The first one is a short moving average with a lookback period of 7 bars. The second one is a long moving average with a lookback period of 65 bars. The indicator returns a percentage value. Above a certain threshold, the market is considered trending.
Interpretation:
The market is considered trending if the RAVI value is above 3%. Otherwise, the market is consolidating.
The moving average periods as well as the threshold of 3% could be changed.
The 3% threshold can for example be adjusted to account for the security volatility.
The moving average periods could be optimized, so you can choose the values that maximize your profit for the market you are trading.
In order to be able to choose the lengths of the moving averages, you need to create two parameters and update the code so it uses these parameter values instead of the default 7 and 65 periods.
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