Coppock Curve with Pivot Points and Divergence

The Coppock Curve with Pivot Points and Divergence indicator is a comprehensive momentum tool designed to identify major long-term market reversals and shifts in trend strength. By combining the classic Coppock formula with modern technical analysis features like automated pivot detection and four types of divergences, it provides a multifaceted view of market momentum.

Usage

The indicator can be used to identify potential market bottoms and tops through several visual cues:

• Zero Line Crossings: Crosses above zero often suggest a transition to bullish momentum, while crosses below zero suggest bearish momentum.
• Divergences: The script automatically identifies Regular Bullish (green), Hidden Bullish (aqua), Regular Bearish (red), and Hidden Bearish (orange) divergences. Regular divergences often signal trend reversals, while hidden divergences can signal trend continuation.
• Pivot Points: Triangles (labels) appearing on the oscillator indicate local highs and lows. These highlights help traders identify when the momentum oscillator is reaching an exhaustion point or starting a new swing.
• Dynamic Zones: The tool calculates probability-based buy and sell zones to help identify extreme momentum readings.

Details

The core of this tool is the Coppock Curve, originally developed by Edwin Coppock as a long-term buy/sell indicator for major indices. It is traditionally calculated as a 10-period Weighted Moving Average (WMA) of the sum of two different Rates of Change (ROC), typically 14 and 11 periods.

This implementation enhances the original concept by:

1. Divergence Logic: Comparing oscillator peaks/valleys against price peaks/valleys to find momentum discrepancies.
2. Dual Curves: Utilizing a secondary Coppock calculation to identify internal crossovers.
3. Statistical Zones: Implementing a probability-based calculation (dzSell and dzBuy functions) to define overextended areas based on a lookback window.

Settings

Oscillator Configuration

• Source: The price data used for the primary calculation (default is close).
• WMA Length: The smoothing period for the primary Coppock Curve.
• Long/Short RoC Lengths: The two lookback periods used to calculate the Rate of Change components.
• Pivot Lookback Right/Left: Determines the number of bars required to confirm a pivot high or low on the oscillator.

Divergence Settings

• Divergence Pivot Lookback Right/Left: Specific lookback settings for identifying peaks and valleys used in divergence detection.
• Max/Min of Lookback Range: Filters divergences based on the distance between the current pivot and the previous one.
• Plotting Toggles: Allows users to enable or disable the display of specific divergence types (Regular Bullish, Hidden Bullish, etc.).

Probability Zones

• Lookback Bars: The window size used for calculating the probability-based buy and sell zones.
• Start Buy/Sell Probability: Thresholds for determining the entry into dynamic zones.

FAQ

How do I interpret the different colored circles and triangles?

Circles on the oscillator represent divergences (Red/Orange for bearish, Green/Aqua for bullish). Triangles represent confirmed Pivot Highs and Pivot Lows, which mark potential momentum reversal points.

Can this indicator be used on lower timeframes?

While the Coppock Curve was originally designed for monthly charts to identify long-term economic cycles, this version can be applied to any timeframe. However, users should adjust the ROC and WMA lengths to suit the volatility of lower timeframes.

How can I access the Coppock Curve with Pivot Points and Divergence?

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