Multi-Divergence Buy/Sell Indicator

The Multi-Divergence Buy/Sell Indicator tool identifies potential market entries by combining momentum signals from the RSI, MACD, and Stochastic oscillators into a unified signal system.

Usage

The Multi-Divergence Buy/Sell Indicator can be used across various timeframes and asset classes to spot momentum shifts. Traders should look for the following labels on the chart:

• Buy Signal: Represented by a green label below the bar. This occurs when the RSI, MACD, and Stochastic indicators all show simultaneous bullish crossovers.
• Sell Signal: Represented by a red label above the bar. This occurs when both the RSI and MACD show bullish crossovers, but the Stochastic indicator does not, suggesting a potential divergence in momentum strength.

Users can adjust the specific lengths and levels of each component oscillator to better fit the volatility of their chosen instrument.

Details

The indicator tracks three primary momentum components:

1. RSI Crossover: Detects when the Relative Strength Index crosses above its 14-period Simple Moving Average (SMA).
2. MACD Crossover: Detects when the MACD line crosses above the signal line.
3. Stochastic Crossover: Detects when the Stochastic oscillator crosses above its 14-period SMA.

The script logic requires a strict alignment of all three crossovers for a "Buy" signal, while the "Sell" signal filters for instances where the Stochastic oscillator fails to confirm the momentum seen in the RSI and MACD.

Settings

• RSI Length: Determines the lookback period for the RSI calculation.
• MACD Short Length: The short-term EMA period for the MACD.
• MACD Long Length: The long-term EMA period for the MACD.
• MACD Signal Smoothing: The smoothing period for the MACD signal line.
• Stochastic Length: The lookback period for the Stochastic calculation.
• Stochastic Overbought Level: Defines the upper threshold for Stochastic analysis.
• Stochastic Oversold Level: Defines the lower threshold for Stochastic analysis.

FAQ

How do I use the Multi-Divergence Buy/Sell Indicator?

The indicator plots labels on the chart. A "Buy" label indicates a confluence of three momentum crossovers, while a "Sell" label indicates a specific divergence between the oscillators.

Which timeframes work best for this indicator?

The indicator is versatile and can be applied to any timeframe; however, traders often find momentum confluence signals more reliable on higher timeframes like the 1H or 4H charts.

How can I access this script?

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