nMikes Divergence Oscillators

The nMikes Divergence Oscillators tool is a comprehensive indicator suite that consolidates multiple normalized oscillators into a single pane to facilitate the identification of divergences and momentum shifts. By applying a diminishing returns scaling formula, it stacks various market metrics—including Fisher Transform, MACD, EFI, TRIX, Stochastic, and RSI—to provide a unified view of market conditions across different calculation methods.

Usage

The indicator displays several layers of oscillators, each anchored to its own baseline within the sub-pane. Traders can use this tool to spot confluence between different indicator types:

• Fisher Transform (Top Level): Used to identify price extremes and potential turning points based on the Fisher Transform of price.
• MACD (Upper-Mid Level): Displays the standard MACD line, signal line, and histogram for trend momentum analysis.
• EFI (Mid Level): The Elder's Force Index identifies the strength behind price movements by combining price change and volume.
• TRIX (Lower-Mid Level): Shows the 1-period rate of change of a triple exponentially smoothed moving average, filtered for price noise.
• Stochastic/RSI (Bottom Level): Classic momentum oscillators scaled to show overbought/oversold conditions and relative strength.

Details

The script utilizes a unique "Diminishing Returns" formula to scale various indicators with different raw value ranges into a normalized format. This allows them to be stacked vertically without overlapping excessively or requiring multiple scales.

Key technical features include:

• Dynamic Range Scaling: Indicators like EFI and TRIX use mean peak/dip calculations to normalize their values relative to historical volatility.
• Stacked Visualization: Each oscillator is offset by a fixed amount (spacing factor) to create a "panel" effect within the indicator window.
• Pivot Detection: Automatic pivot high and low detection on TRIX oscillators helps in spotting structural shifts in momentum.

Settings

Fisher Transform

• Fisher Source: The price source used for Fisher calculations.
• Fisher 01/02 Length: The lookback periods for the two Fisher oscillators.

MACD

• Fast/Slow/Signal MACD Length: Standard parameters for the Moving Average Convergence Divergence calculation.

Elder's Force Index (EFI)

• EFI Length: Period for the initial EFI calculation.
• EFI Signal Length: Smoothing period for the EFI signal line.

TRIX

• Fast/Slow TRIX Length: Lookback periods for the triple-smoothed momentum indicators.

Stochastic & RSI

• Stoch Length/Smooth/Signal: Parameters governing the Stochastic oscillator.
• RSI Source/Length/Smooth: Parameters governing the Relative Strength Index.

Scaling & Spacing

• Dynamic Range Decay: When enabled, the scaling limits will decay over time, allowing the indicator to adapt to changing volatility.
• Spacing Factor: Adjusts the vertical distance between the different stacked oscillator components.
• EFI/TRIX Range Multiplier: Controls the sensitivity of the normalization for these specific indicators.

FAQ

How do I interpret the colors in the histograms?

The colors represent momentum direction and strength. Bright colors typically indicate strong trending momentum, while faded colors suggest weakening momentum or potential exhaustion.

What is the purpose of the horizontal lines?

The horizontal lines (0.0, 0.5, 1.0, 1.5, 2.0) act as the zero-baselines for each individual stacked oscillator, helping you distinguish where one indicator ends and the next begins.

How can I access nMikes Divergence Oscillators?

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