Momentum Divergenze

The Momentum Divergenze indicator tracks momentum relative to price movement to identify potential trend exhaustion and reversals through visual divergence signals and volatility bands.

Usage

The indicator can be used to spot discrepancies between price action and momentum. When price reaches a new high or low but momentum fails to follow, the tool highlights these areas to suggest a potential trend change.

• Crosses: Small crosses appear on the momentum line to represent when the price has hit a period-defined high or low.
• Thick Lines: A thick red or green line on the momentum plot indicates segments where the price and momentum are moving in opposite directions (e.g., price down but momentum up).
• Circles: Large circles highlight momentum peaks that exceed the Bollinger Band envelopes, suggesting overextended conditions.
• Background Highlights: When enabled, background colors mark regions where price reaches an extreme while momentum is trending in the opposite direction.

Details

The script calculates momentum as the difference between the current source and the source value from a specified period ago. It then compares the relative position of price (using highest/lowest over a lookback period) against the relative position of the momentum line. To filter for extremes, it applies a Bollinger Band calculation directly to the momentum values. It also uses a Smoothed Weighted Moving Average (SWMA) to assess the direction of momentum change over multiple bars to confirm divergence strength.

Settings

• Length Momentum: Sets the period for the basic momentum calculation.
• Source: Determines the price data used for calculations (default is Close).
• Use BandBollinger to find Mom peak out?: Toggles the visibility of momentum exhaustion circles.
• Show background color?: Toggles the background highlights for divergence zones.
• Period back look High & Low: Sets the lookback period used to identify price and momentum extremes.
• Len BB: The period for the Bollinger Band calculated on the momentum line.
• Mult: The standard deviation multiplier for the Bollinger Band width.

FAQ

How do I use the Bollinger Band circles?

The circles appear when the momentum line breaks out of its standard deviation bands, signaling that momentum has reached an extreme state and may be due for a mean reversion.

What do the thick green and red lines represent?

These lines appear directly on the momentum plot when the script detects "hidden" or "regular" divergence characteristics, specifically highlighting instances where the slope of momentum contradicts the slope of price.

How can I access Momentum Divergenze?

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