TDI - Traders Dynamic Index + RSI Divergences + Buy/Sell Signals

The TDI - Traders Dynamic Index + RSI Divergences + Buy/Sell Signals indicator provides an all-in-one trend following and momentum analysis tool by combining the Traders Dynamic Index (TDI) with automated RSI divergence detection and execution signals.

Usage

The Usage section describes how the script can be used to identify market sentiment and potential entry/exit points. The tool utilizes the Dean Malone method for trend evaluation, where the interaction between the RSI Price Line (Green) and the Market Base Line (Yellow) determines the overall bias.

• Trend Identification: When the Green RSI Price Line is above the Yellow Market Base Line (MBL), the background is highlighted to indicate a bullish bias. Conversely, being below suggests a bearish bias.
• Buy/Sell Signals: Labeled signals are generated based on specific momentum conditions. A "Buy" label appears when the RSI Price Line crosses above the Trade Signal Line (Red) while both are above the 50 level and the MBL. A "Sell" label appears when the RSI Price Line crosses below the Trade Signal Line while both are below the 50 level and the MBL.
• Divergence Detection: The script automatically identifies and labels Regular and Hidden RSI divergences (Bullish and Bearish), which serve as early warnings for potential price reversals or trend continuations.

Details

The script is a comprehensive modification of the original TDI concept developed by Dean Malone, incorporating work from LazyBear and JustUncleL. It calculates volatility bands (VB) based on standard deviations of the RSI to create a dynamic environment for momentum.

The core logic relies on several moving averages applied to the RSI:

1. RSI Price Line (Fast MA): Tracks immediate price momentum.
2. Trade Signal Line (Slow MA): Acts as a trigger for short-term shifts.
3. Market Base Line (MBL): Represents the overall market trend.

The tool includes a divergence engine that scans for higher highs/lower lows in price that are not confirmed by the RSI, plotting these instances directly on the oscillator panel with customizable lookback periods.

Settings

• RSI Period: Sets the lookback length for the underlying Relative Strength Index calculation.
• Band Length: Determines the period for the Volatility Band (Bollinger-style) calculations on the RSI.
• Fast MA on RSI: Adjusts the period for the green RSI Price Line.
• Slow MA on RSI: Adjusts the period for the red Trade Signal Line.
• Pivot Lookback Right/Left: Controls the number of bars required to confirm a pivot point for divergence detection.
• Max/Min Lookback Range: Defines the bar range window in which the script searches for divergence.
• Plot Bullish/Bearish: Toggles the visibility of regular divergence labels.
• Plot Hidden Bullish/Bearish: Toggles the visibility of hidden (trend continuation) divergence labels.

FAQ

How do I interpret the background coloring? The green background shading appears when the fast RSI line (Green) is trading above the yellow Market Base Line, indicating a bullish trend environment.

What is the "Best Setup" alert? The script triggers a specific alert when the RSI Price Line crosses the 50 (Mid) level, often signifying a shift in market control.

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