MACD and RSI divergence v2

The MACD and RSI divergence v2 indicator identifies potential trend reversals and continuations by detecting regular and hidden divergences across MACD, RSI, and the MACD Histogram. It serves as a comprehensive tool for intraday traders looking to align momentum shifts with price action.

Usage

The tool highlights both regular and hidden divergences directly on the chart. Regular divergences often suggest a potential trend reversal, while hidden divergences typically indicate trend continuation.

Traders can utilize this script in several ways:

• Multi-Indicator Confirmation: You can configure the script to only show signals when multiple oscillators (e.g., both MACD and RSI) show a divergence simultaneously.
• Trend Following: Use hidden divergences on higher timeframes to establish trend bias, then seek regular divergences on lower timeframes for precise entries.
• Confluence: The indicator is most effective when paired with static support and resistance lines or other price action techniques.

Details

The script calculates the MACD using customizable fast/slow lengths and smoothing. It also incorporates a standard RSI calculation. The divergence logic triggers when the MACD histogram switches trend (e.g., the histogram peaks or troughs) and compares the resulting oscillator extremes against price extremes within a 100-bar lookback range.

Settings

MACD Settings

• Simple MA(Oscillator): Toggles between SMA and EMA for the MACD calculation.
• Simple MA(Signal Line): Toggles between SMA and EMA for the Signal Line.
• Source MACD: The price source used for MACD calculations (default: OHLC4).
• Fast/Slow Length: Parameters for the underlying MACD moving averages.
• Signal Smoothing: The lookback period for the Signal Line.

RSI Settings

• Source RSI: The price source used for RSI calculations.
• Length RSI: The lookback period for the RSI.

Logic & Visuals

• Check MACD/RSI/HISTOGRAM divergence?: Enables or disables divergence detection for each specific oscillator.
• Divergence line?: Toggles the drawing of connecting trendlines between the price peaks/troughs that form the divergence.

FAQ

How do I use the "Check" settings?

By checking multiple boxes (e.g., MACD and RSI), the indicator will only produce a signal if both indicators confirm the divergence concurrently.

What is the difference between REG and HID labels?

"REG" stands for Regular Divergence (reversal signal), and "HID" stands for Hidden Divergence (continuation signal).

How can I access MACD and RSI divergence v2?

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