Polarity Divergences

The Polarity Divergences indicator identifies internal order flow anomalies by analyzing the direction of intrabars relative to the overarching chart bar to highlight potential market exhaustion or trend pauses.

Usage

The tool is primarily used to identify "abnormal" price action where the internal composition of a candle contradicts its final closing direction. When the majority of intrabars do not share the same polarity as the main chart bar, the candle is highlighted (defaulting to orange).

• Bullish Divergence on Up Bar: Occurs when a chart bar closes positive, but the underlying lower-timeframe activity is predominantly negative. This may suggest weakening buying pressure.
• Bearish Divergence on Down Bar: Occurs when a chart bar closes negative, but the underlying lower-timeframe activity is predominantly positive. This may suggest weakening selling pressure.

These anomalies often precede reversals or occur during significant trend pauses. Users can enable directional characters (arrows) and alerts to stay notified of these occurrences in real-time.

Details

The script functions by calculating "Bar Polarity," defined as the relationship between the close and the open. It utilizes request.security_lower_tf() to extract an array of polarities from a lower timeframe (LTF).

To ensure optimal data coverage and respect the 100,000 intrabar limit in Pine Script™, the indicator dynamically scales the LTF based on the chart's timeframe:

• Charts < 1D: Uses a 1-minute LTF.
• Charts < 1W: Uses a 30-minute LTF.
• Charts >= 1W: Uses a 1-day LTF.

Settings

• Show character on divergences for up bars: Enables a visual marker when an upward chart bar has conflicting internal polarity.
• Character / Color / Location: Customizes the icon, its color, and whether it appears above or below the bar for up-bar divergences.
• Show character on divergences for down bars: Enables a visual marker when a downward chart bar has conflicting internal polarity.
• Character / Color / Location: Customizes the icon, its color, and whether it appears above or below the bar for down-bar divergences.
• Fill candle bodies on divergences: When enabled, paints the candle body orange if the aggregate intrabar polarity differs from the chart bar polarity.

FAQ

How do I interpret an orange bar?

An orange bar indicates a Polarity Divergence, meaning the internal price movement (intrabars) moved primarily in the opposite direction of the final candle's close.

Does this work on all timeframes?

Yes, the script automatically adjusts its internal data mining to the most appropriate lower timeframe based on your current view to provide the best possible coverage.

How can I access Polarity Divergences?

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