Order Flow Momentum Divergence

The Order Flow Momentum Divergence indicator monitors order flow momentum through volume footprint data to identify potential leading signals by comparing it to price momentum and tracking divergences. This tool aims to solve the "confirmation gap" by determining if the internal order flow driving a price move is still supportive or if momentum has shifted before price reflects it.

Usage

The indicator runs two signals in parallel to identify when transactional backing and price action are out of sync. It is primarily used to detect early reversal warnings or structural trend confirmation.

• Order Flow Analysis: Use the Flow Momentum line to see the aggregate directional lean of order flow. When Flow Momentum leads price momentum, it suggests "smart money" is positioning before a breakout or reversal.
• Divergence Spotting: Look for instances where Flow Momentum rises while Price Momentum falls (bullish divergence) or vice versa (bearish divergence). These are highlighted by the sub-pane fills and background highlights.
• Visualizing Bias: Use the chart overlay bands to see the strength of the order flow bias directly on the candles. A purple band indicates bearish bias, while a green band indicates bullish bias.

Details

The indicator constructs its signals using the following logic:

1. Flow Momentum: This is a net bias score created by processing footprint delta through 100 Hull Moving Averages (HMA) simultaneously, with lengths ranging from 2 to 101. Each result is normalized and averaged to produce a single value between -100 and +100. This represents the aggregate directional conviction of order flow across multiple timeframes.
2. Price Momentum: A standard 7-period RSI is rescaled to a -100 to +100 range. This allows for a direct, 1:1 visual comparison with the Flow Momentum score.
3. Divergence Calculation: A divergence is flagged when Flow Momentum and Price Momentum move in opposite directions. The indicator fills the area between the two lines, with the color intensity increasing as the gap (signal strength) widens.
4. Overlay Bands: These bands act as a price continuation or divergence anchor. They are calculated based on an EMA of price and offset proportionally by either the Flow Momentum score or the gap between the two signals.

Note: This indicator utilizes the request.footprint function, which requires a TradingView subscription level that supports Volume Footprint data.

Settings

Sub-Pane Series

• Show Flow Momentum Line: Toggles the purple line representing the aggregate order flow bias score.
• Show Price Momentum Line: Toggles the yellow line representing the rescaled 7-period RSI.
• Show Divergence Fill: Toggles the green/red shaded area between the flow and price lines.
• Show Difference Histogram: Toggles a histogram showing the raw arithmetic difference between flow and price momentum.

Chart Overlay

• Band Mode: Chooses between "Bias Band" (flow momentum only), "Divergence Band" (gap between signals), or "Combined" (both).
• Enable Chart Overlay: Master switch for all price-chart renderings.
• Show Bias Band Line/Fill: Toggles the visibility of the Flow Momentum-driven band and its color fill.
• Show Divergence Band Line/Fill: Toggles the visibility of the divergence-driven band and its color fill.
• Show Background Highlight: Tints the background when the divergence gap exceeds a threshold of 50.

Overlay Smoothing

• Smooth Overlay Bands (EMA): Applies an EMA to the overlay bands to reduce bar-to-bar jitter.
• Smoothing Length: Sets the EMA period for overlay smoothing (default is 5).

FAQ

How does Flow Momentum differ from standard Delta? Standard delta is often noisy and localized to a single bar. Flow Momentum aggregates delta across 100 different HMA lengths to provide a smoothed, multi-timeframe view of directional conviction.

What does it mean when the Flow Momentum line is more opaque? The opacity of the Flow Momentum line and its associated fills scales with conviction. Faded colors represent weak bias near zero, while fully opaque colors represent high conviction approaching ±100.

How can I access the Order Flow Momentum Divergence? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.