📊 TECHNICAL
Vortex Indicator
A directional-movement oscillator with two crossing lines, VI+ and VI-, that identifies the start and continuation of trends using ATR-normalized price swings.
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Live Demo — Vortex Indicator applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is the Vortex Indicator?
The Vortex Indicator (VI) was introduced by Etienne Botes and Douglas Siepman in a 2010 Stocks & Commodities article. It measures directional price movement by comparing how far each bar's high/low reaches relative to the prior bar, normalized by true range, producing two lines: VI+ (upward movement) and VI- (downward movement).
Formula
VM+ = |High - PriorLow|
VM- = |Low - PriorHigh|
TR = max(High, PriorClose) - min(Low, PriorClose)
VI+ = Sum(VM+, Period) / Sum(TR, Period)
VI- = Sum(VM-, Period) / Sum(TR, Period)Parameters
| Parameter | Default | Description |
|---|---|---|
| Period | 14 | Lookback window for summing VM+, VM-, and True Range |
Signal Interpretation
- VI+ crossing above VI- signals the start of an uptrend; the reverse signals a downtrend.
- The wider the gap between VI+ and VI-, the stronger the prevailing directional trend.
- Converging lines suggest a lack of clear directional conviction.
- Frequent crossovers can indicate a whipsaw market best avoided for trend trades.
- Sustained VI+ dominance confirms an established uptrend, and vice versa.
Tips & Best Practices
- Confirm crossovers with a trend-strength filter such as ADX.
- The default 14-period setting works well on daily charts; shorter periods increase sensitivity but also whipsaw.
- Works well as a trend-following entry trigger paired with a longer-term moving average.