PPO Divergence Alerts 3.0

The PPO Divergence Alerts 3.0 indicator identifies potential trend reversals by detecting bullish and bearish divergences between price action and the Percentage Price Oscillator (PPO) directly on the chart. By overlaying these signals on the price candles, the tool provides a streamlined visual experience that minimizes screen clutter while maintaining technical accuracy.

Usage

The indicator can be used to spot exhaustion in current trends or early signs of a trend shift. Signals are displayed as labeled shapes:

• Short-Term Divergences: Labeled with a "P" in pink/fuchsia, these indicate immediate momentum shifts between price and the PPO.
• Long-Term Divergences: Labeled with a "P" in purple, these utilize a longer lookback period to identify more significant structural divergences.
• Tops and Bottoms: Small triangles (red for tops, green for bottoms) can be enabled to highlight where the PPO oscillator has reached local extrema, regardless of whether a divergence has formed.

Users can interpret the intensity of the signal based on the opacity; more solid colors represent signals that meet specific PPO threshold filters (e.g., PPO above 1 or below -1), while more transparent shapes show all detected divergences.

Details

The Percentage Price Oscillator (PPO) is a momentum indicator that measures the difference between two moving averages as a percentage of the larger moving average. This makes it particularly useful for comparing momentum across different price levels or assets.

This script calculates the PPO using exponential moving averages (EMA) and then applies a smoothing simple moving average (SMA). Divergences are calculated by comparing local price peaks/troughs with the corresponding peaks/troughs in the PPO line. The script supports two distinct lookback windows to differentiate between minor momentum fluctuations and major trend shifts.

Settings

• Show highs & lows (triangles): Toggles the display of small red/green triangles at PPO pivot points.
• Show Short term divergences (pink): Enables or disables the display of standard PPO divergences.
• Show Long term divergences (purple): Enables or disables the display of divergences calculated over a longer lookback.
• Long term Length: Sets the lookback period (default 55) for identifying long-term structural pivots.
• PPO Fast: The period for the fast EMA (default 12).
• PPO Slow: The period for the slow EMA (default 26).
• PPO Signal: The period for the PPO signal line calculation (default 9).
• PPO Smooth: The smoothing factor applied to the PPO line (default 2).
• Source: The price data used for calculation (default is Close).

FAQ

How do I interpret the "P" labels?

A pink "P" indicates a short-term divergence, while a purple "P" indicates a long-term divergence. If the label is above the candle, it is a bearish signal; if it is below, it is a bullish signal.

What is the difference between solid and transparent shapes?

Solid shapes represent signals that occur at extreme PPO levels, often considered higher conviction. Transparent shapes show every detected divergence regardless of the PPO's absolute value.

How can I access PPO Divergence Alerts 3.0?

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