RSI Divergence Pro+ Volume

The RSI Divergence Pro+ Volume indicator helps traders identify potential bullish and bearish reversal zones by combining classic RSI divergence logic with advanced volume confirmation to filter out false signals.

Usage

The RSI Divergence Pro+ Volume is used to spot market exhaustion where price action and momentum disagree. Users should look for the following signals:

• Bullish Divergence: Occurs when the price records a lower low while the RSI forms a higher low. This suggests selling pressure is waning.
• Bearish Divergence: Occurs when the price records a higher high while the RSI forms a lower high. This suggests buying momentum is slowing down.
• Volume Confirmation: Unlike standard divergence tools, this script only triggers a signal when the trading volume exceeds a dynamic threshold. This helps ensure that the reversal has sufficient market participation behind it.

The script provides visual "BULL↑" and "BEAR↓" labels on the chart. It is recommended for use on liquid assets and timeframes ranging from 15m to 4H. For best results, users should combine these signals with existing trend analysis or support/resistance levels.

Details

This tool utilizes a non-repainting calculation method, meaning signals are only confirmed once a bar has closed. The logic relies on comparing current price/RSI extremes against a historical window defined by the "Divergence Lookback" and "Comparison Window" settings.

The volume filter uses a simple moving average (SMA) of volume multiplied by a user-defined factor. This ensures that signals only appear during periods of high relative activity, filtering out "noisy" divergences that occur during low-liquidity periods.

Settings

Divergence Configuration

• RSI Length: The number of bars used to calculate the Relative Strength Index.
• Overbought: The RSI level above which bearish divergences are sought (typically > 65).
• Oversold: The RSI level below which bullish divergences are sought (typically < 35).

Divergence Lookback

• Divergence Lookback: Determines how many bars back the script looks to find the start of a potential divergence.
• Comparison Window: The period length used to identify the pivot highs or lows at the start of the divergence period.

Volume Confirmation

• Volume Multiplier: The factor applied to the Volume MA; volume must exceed this product to validate a signal.
• Volume MA Length: The lookback period for the volume moving average.

Visual Options

• Show Divergence Labels: Toggles the visibility of "BULL" and "BEAR" text labels.
• Highlight Signal Bars: Enables a background highlight on bars where a confirmed signal occurs.
• Use Color Gradient / Gradient Opacity: Customizes the transparency and style of the signal labels.

FAQ

How do I use the RSI Divergence Pro+ Volume?

Apply the indicator to your chart and monitor for green "BULL" or red "BEAR" labels. These indicate a divergence confirmed by a spike in volume, suggesting a potential trend reversal.

Does this indicator repaint?

No, the script is designed to trigger signals only on the close of the bar, ensuring that once a label appears, it remains fixed on the chart.

How can I access RSI Divergence Pro+ Volume?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.