Ultimate Oscillator + Divergences

The Ultimate Oscillator + Divergences indicator is a momentum-based technical analysis tool that identifies trend reversals and continuations by detecting four types of divergences across multiple timeframes.

Usage

The tool is primarily used to identify market momentum shifts and potential trade entries through automated divergence detection.

• Regular Bullish Divergence: Occurs when price makes a lower low but the oscillator makes a higher low, suggesting a potential reversal from a downtrend to an uptrend.
• Regular Bearish Divergence: Occurs when price makes a higher high but the oscillator makes a lower high, indicating a potential reversal from an uptrend to a downtrend.
• Hidden Bullish Divergence: Occurs when price makes a higher low while the oscillator makes a lower low, signaling potential trend continuation.
• Hidden Bearish Divergence: Occurs when price makes a lower high while the oscillator makes a higher high, signaling potential trend continuation.

Traders often look for these signals at key support and resistance levels or moving average confluences to increase trade probability.

Details

The Ultimate Oscillator (UO) was developed to solve a common flaw in single-period oscillators: the tendency to generate false signals after rapid price moves. By incorporating three distinct timeframes (typically 7, 14, and 28 periods) into its calculation, the UO smooths out volatility and provides a more comprehensive view of momentum. This implementation adds a divergence engine that scans for pivot points and compares price action to the oscillator's movement within a user-defined lookback window.

Settings

Oscillator Periods

• UO fast length: The shortest period used in the UO calculation (default is 7).
• UO middle length: The intermediate period used in the UO calculation (default is 14).
• UO slow length: The longest period used in the UO calculation (default is 28).

Divergence Detection

• Pivot Lookback Right: Number of bars to the right of a pivot to confirm a high or low.
• Pivot Lookback Left: Number of bars to the left of a pivot to confirm a high or low.
• Max of Lookback Range: The maximum number of bars allowed between two pivots for a divergence to be valid.
• Min of Lookback Range: The minimum number of bars required between two pivots to filter out immediate noise.

Visibility

• Plot Bullish/Hidden Bullish/Bearish/Hidden Bearish: Toggle switches to enable or disable the display of specific divergence types on the chart.

FAQ

How do I access Ultimate Oscillator + Divergences?

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

What makes the Ultimate Oscillator different from RSI?

While RSI uses a single timeframe, the Ultimate Oscillator uses a weighted average of three different timeframes to reduce false signals and provide a more stable momentum reading.

Can I set alerts for specific divergences?

Yes, the script includes alert conditions for individual divergence types (Regular Bullish, Hidden Bearish, etc.) as well as grouped alerts for any bullish or bearish signal.