RSI Divergence X Ichimoku Cloud X 200EMA

The RSI Divergence X Ichimoku Cloud X 200EMA indicator is a multi-layered trend-following and reversal strategy tool designed to identify high-probability entries by filtering RSI divergences through trend confirmation filters. It aims to provide traders with a systematic approach to entering trades when momentum shifts align with the broader market direction.

Usage

The script can be used to identify potential long and short entries based on the confluence of three technical pillars:

• Bullish Setup: A long entry is triggered when the RSI identifies a bullish divergence (either regular or hidden) while the Ichimoku Cloud is positioned above the 200 EMA. This ensures that counter-trend momentum is traded only when the primary long-term trend is bullish.
• Bearish Setup: A short entry is triggered when the RSI identifies a bearish divergence (either regular or hidden) while the Ichimoku Cloud is positioned below the 200 EMA. This filters for bearish momentum shifts within a primary downtrend.
• Exits: The strategy includes built-in exit logic based on RSI levels. Long positions are closed when the RSI crosses above a defined overbought threshold, and short positions are closed when the RSI crosses below a defined oversold threshold.

This tool is particularly effective on intraday charts where trend-following with momentum confirmation can help filter out noise.

Details

The script integrates three distinct methodologies to confirm market state:

1. RSI Divergence: It automatically detects regular and hidden divergences using pivot lookback logic. Regular divergences suggest potential trend reversals, while hidden divergences often signal trend continuation.
2. Ichimoku Cloud: Used as a medium-term trend filter. The relationship between Lead Line 1 and Lead Line 2 defines the "Cloud" position.
3. 200 EMA: Acts as the ultimate trend filter. By comparing the Ichimoku Cloud's position relative to the 200-period Exponential Moving Average, the script ensures trades are only taken in the direction of the macro trend.

Settings

RSI & Divergence

• RSI Length: Sets the lookback period for the Relative Strength Index calculation.
• Source: Determines the price data used for the RSI (default is Close).
• Pivot Lookback Right/Left: Defines the number of bars required to confirm a pivot high or low for divergence detection.
• Max/Min Range for Divergence: Sets the window of bars within which a divergence must occur to be considered valid.

Strategy Parameters

• Take Profit Level Long: The RSI level at which a long position will be closed.
• Take Profit Level Short: The RSI level at which a short position will be closed.

Ichimoku Cloud

• Conversion Line Periods: The lookback period for the Tenkan-sen.
• Base Line Periods: The lookback period for the Kijun-sen.
• Lagging Span 2 Periods: The lookback period for Senkou Span B.
• Displacement: The number of bars the cloud is shifted forward.

FAQ

How do I use the RSI Divergence X Ichimoku Cloud X 200EMA?

Simply add the script to your chart and monitor the automated entry signals which appear when divergence aligns with the trend filters.

Can I adjust the trend filters?

Yes, you can modify the Ichimoku periods and the RSI length in the settings menu to better suit different timeframes or asset classes.

How do I access RSI Divergence X Ichimoku Cloud X 200EMA?

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