This Divergence for Many Panel indicator is built upon the realtme divergence drawing code originally authored by LonesomeTheBlue, now in the form of a panel indicator.
The available oscillators, hand picked for their ability to identify high quality divergences currently include:
- True Strength Index (TSI)
- Index ( )
- ( )
- Time Segmented (TSV)
- Cumulative Delta (CDV)
Note: this list of available oscillators may be added to or altered at a later date.
The indicator includes the following features:
- Ability to select any of the above oscillators
- Optional divergence lines drawn directly onto the oscillator in realtime.
- Configurable alerts to notify you when divergences occur.
- Configurable lookback periods to fine tune the divergences drawn in order to suit different trading styles and timeframes, including the ability to enable automatic adjustment of period per chart timeframe.
- Background colouring option to indicate when the selected oscillator has crossed above or below its centerline.
- Alternate timeframe feature allows you to configure the oscillator to use data from a different timeframe than the chart it is loaded on.
- Oscillator name label, so you can clearly see which oscillator is selected, in the case you have multiple loaded onto a chart.
- Optional adjustable range bands.
- Automatic adjustment of line colours, centerlines and range band levels on a per oscillator basis by default.
- Ability to customise the colours of each of the oscillators.
What is the ( UO )?
“The indicator (UO) indicator is a tool used to measure momentum across three varying timeframes. The problem with many momentum oscillators is that after a rapid advance or decline in price, they can form false divergence trading signals. For example, after a rapid rise in price, a divergence signal may present itself, however price continues to rise. The attempts to correct this by using multiple timeframes in its calculation as opposed to just one timeframe which is what is used in most other momentum oscillators.”
What is the True Strength Index ( TSI )?
"The true strength index (TSI) is a technical momentum oscillator used to identify trends and reversals. The indicator may be useful for determining overbought and oversold conditions, indicating potential trend direction changes via centerline or signal line crossovers, and warning of trend weakness through divergence."
What is the Index ( )?
“The Index ( ) is a technical oscillator that uses price and data for identifying overbought or oversold signals in an asset. It can also be used to spot divergences which warn of a trend change in price. The oscillator moves between 0 and 100. Unlike conventional oscillators such as the ( ), the Index incorporates both price and data, as opposed to just price. For this reason, some analysts call the volume-weighted .”
What is the ( )?
"The ( ) is a used in . measures the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions in the price of that security. The can do more than point to overbought and oversold securities. It can also indicate securities that may be primed for a trend reversal or corrective pullback in price. It can signal when to buy and sell. Traditionally, an reading of 70 or above indicates an overbought situation. A reading of 30 or below indicates an oversold condition. It is also commonly used to identify divergences."
What is the (StochRSI)?
"The (StochRSI) is an indicator used in that ranges between zero and one (or zero and 100 on some charting platforms) and is created by applying the oscillator formula to a set of ( ) values rather than to standard price data. Using values within the formula gives traders an idea of whether the current value is overbought or oversold. The StochRSI oscillator was developed to take advantage of both momentum indicators in order to create a more sensitive indicator that is attuned to a specific security's historical performance rather than a generalized analysis of price change."
What Is Time Segmented Volume?
"Time segmented (TSV) is a indicator developed by Worden Brothers Inc. that segments a stock's price and according to specific time intervals. The price and data is then compared to uncover periods of accumulation (buying) and distribution (selling)."
What is Cumulative Delta ( CDV )?
"The CDV analyses the net buying at market price and net selling at market price. This means, that delta is measuring whether it is the buyers or sellers that are more aggressive in taking the current market price. It measures the degree of intent by buyers and sellers, which can be used to indicate who is more dominant. The CDV can be used to help identify possible trends and also divergences"
What are divergences?
Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction.
There are 4 main types of divergence, which are split into 2 categories;
regular divergences and hidden divergences. Regular divergences indicate possible trend reversals, and hidden divergences indicate possible trend continuation.
Regular divergence: An indication of a potential trend reversal, from the current downtrend, to an uptrend.
Regular divergence: An indication of a potential trend reversal, from the current uptrend, to a downtrend.
Hidden divergence: An indication of a potential uptrend continuation.
Hidden divergence: An indication of a potential downtrend continuation.
With this indicator you can set alerts to notify you when any/all of the above types of divergences occur, on any chart timeframe you choose.
You can adjust the default periods to suit your prefered trading style and timeframe. If you like to trade a shorter time frame, lowering the default lookback values will make the divergences drawn more sensitive to short term price action.
How do traders use divergences in their trading?
A divergence is considered a leading indicator in , meaning it has the ability to indicate a potential price move in the short term future.
Hidden and hidden divergences, which indicate a potential continuation of the current trend are sometimes considered a good place for traders to begin, since trend continuation occurs more frequently than reversals, or trend changes.
When trading regular divergences and regular divergences, which are indications of a trend reversal, the probability of it doing so may increase when these occur at a strong support or . A common mistake new traders make is to get into a regular divergence trade too early, assuming it will immediately reverse, but these can continue to form for some time before the trend eventually changes, by using forms of support or resistance as an added confluence, such as when price reaches a moving average, the success rate when trading these patterns may increase.
Typically, traders will manually draw lines across the swing highs and swing lows of both the price chart and the oscillator to see whether they appear to present a divergence, this indicator will draw them for you, quickly and clearly, and can notify you when they occur.
Disclaimer: This script includes code from several stock indicators by Tradingview as well as the Divergence for Many Indicators v4 by LonesomeTheBlue. With special thanks.
- Added a 'flipped' warning label to the oscillator panel to show when the osc is flipped.
- Set the default oscillator line width to 2 on oscillators that have just one line.
- Removed the double centerline crossover background colour feature.
- Updated chart image.
- Updated default value of TSV MA length from 3, to 7.
- Remove the auto adjust pivot period based on current chart timeframe feature.
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