Kase Convergence Divergence

The Kase Convergence Divergence indicator measures directional market strength using volatility-adjusted log return structures and statistical range projections to identify momentum shifts and trend regimes.

Usage

The indicator can be used to identify trend direction and momentum strength through its oscillator output and visual aids.

• Trend Confirmation: When the oscillator is above zero, the market is in a bullish regime. Conversely, values below zero indicate a bearish regime.
• Momentum Shifts: Crossovers of the zero line serve as primary signals for potential trend reversals or new momentum cycles.
• Derivative Modes: Users can switch between the "First Derivative" (Kase Projection Oscillator) for a direct view of price velocity or the "Second Derivative" (Kase Convergence Divergence) to capture the acceleration and deceleration of price movements.
• Visual Feedback: The tool includes heatmap-style coloring for the oscillator and optional candlestick painting to synchronize chart analysis with the indicator's internal logic.

Details

The Kase Convergence Divergence is built upon Cynthia Kase’s work on statistical momentum. It utilizes two volatility-normalized transforms: KSDI Up (measuring high relative to past low) and KSDI Down (measuring low relative to past high).

A unique aspect of this implementation is the "Sweep Logic," which iterates through a user-defined range of lookback lengths (e.g., 25 to 35). By retaining the maximum values across this loop, the indicator minimizes the noise associated with static lookback periods and provides a more robust statistical range projection. The final output is then smoothed using various selectable moving average types to refine the signal.

Settings

Lengths and Process Level

• Sweep - Start Length: The starting lookback period for the statistical sweep loop.
• Sweep - End Length: The ending lookback period for the statistical sweep loop.
• Choose which derivative to plot: Selects between the first derivative (velocity) or second derivative (acceleration) logic.

Smoothing

• Smoothing Type: Determines the mathematical formula used for smoothing (options include SMA, EMA, DEMA, HMA, TEMA, RMA, LINREG, and WMA).
• Period: The length of the smoothing moving average applied to the oscillator.

Plotting

• Paint candles according to Trend?: When enabled, colors the chart bars based on the current bullish or bearish status of the oscillator.

FAQ

How do I interpret the heatmap colors?

The heatmap intensity increases as the oscillator moves further from zero, indicating stronger directional momentum. Brighter greens represent strong bullish momentum, while brighter reds indicate strong bearish momentum.

What is the benefit of the Multi-Length Sweep?

The sweep logic prevents the indicator from becoming "hooked" on a single timeframe. By aggregating data across multiple lookbacks, the indicator becomes more adaptive to changing market cycles and reduces false signals.

How do I access Kase Convergence Divergence?

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