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Vortex indicator

Two oscillating lines built from the distance between current highs and lows and the prior bar's opposite extreme, used to spot trend changes.

VI+ sums the distance from each high to the previous low, VI- sums the distance from each low to the previous high, and both are normalised by true-range. Crossings of the two lines are read as trend changes.

It is conceptually close to the directional-movement-index with different arithmetic, and it produces similar signals with slightly different timing.

Its independent track record is thin, and its crossovers suffer the same whipsaw problem as every other two-line system in ranging markets. It is worth knowing mainly because it appears on many platforms, not because it solves anything the older indicators do not.

Related: directional-movement-index, adx, true-range, whipsaw, trend-following

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

A range beside a trendOne chart swinging between a flat floor and ceiling, another stepping upwards inside a pair of sloping lines.Range-boundresistancesupportprice bounces between two levelsTrendingthe trend channelhigher highs and higher lowsA range has two flat edges; a trend has two sloping ones.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.

Educational only, not advice. Spotted an error? Post in Site Feedback.