Divergences Refurbished

The Divergences Refurbished indicator is a comprehensive technical analysis tool designed to identify regular and hidden divergences between price action and over 15 different indicators or 40 customizable symbols. By detecting these discrepancies, the script helps traders spot potential trend reversals and continuations across multiple timeframes and asset classes.

Usage

The Usage section focuses on how to interpret the signals generated by the script and how to adjust its extensive settings for optimal performance.

• Divergence Types: The script can be configured to show Regular divergences (potential trend reversals) or Hidden divergences (potential trend continuations), or both simultaneously.
• Asset Comparison: Users can compare the current price action not only against indicators but also against up to 40 external symbols (e.g., comparing SPY to DXY or BTC to Gold) to find inter-market divergences.
• Signal Filtering: To reduce noise, users can set a minimum "Divergence Number," requiring a specific amount of indicators to agree before a signal is displayed on the chart.
• Visual Management: If the chart becomes cluttered, the "Show Indicator Names" setting can be adjusted to show full names, abbreviations, or just the count of divergences. Tooltips are available to provide detailed info without taking up screen space.

Details

The script is a significant enhancement of the "Divergence for Many Indicators" framework, ported to PineScript v5. It utilizes pivot points to identify local highs and lows in both price and the selected momentum or volume oscillators.

Key technical implementations include:

• Statistical Analysis: Includes a Z-Score/T-Score indicator that automatically switches between distributions based on the lookback length (using T-Score for lengths under 30).
• Volume Integration: Incorporates specialized volume-weighted oscillators like Price-Volume Trend (PVT) and Volume Weighted MACD to find discrepancies between money flow and price.
• Normalization: Features the Fisher Transform to normalize price data into a Gaussian distribution, making turning points more apparent.
• External Inputs: Allows for up to four external indicator sources to be plugged into the divergence engine manually.

Settings

Divergence Settings

• Pivot Period: Sets the lookback period for identifying pivot highs and lows.
• Source for Pivot Points: Choose between "Close" or "High/Low" for divergence detection.
• Maximum Bars to Check: Defines the lookback range for connecting pivot points.
• Don't Wait for Confirmation: If enabled, the script plots signals as soon as a pivot is detected rather than waiting for additional candle closes.

Indicators to Check

• Indicator List: Toggle 15+ built-in indicators including MACD, RSI, Stochastic, CCI, Momentum, OBV, CMF, and more.
• Custom Labels: Add emojis or specific text next to indicator signals for better categorization.

Symbols to Check

• Symbol Inputs: Add up to 40 ticker symbols to check for price-to-price divergences across different markets.

Parameter Groups

• MACD/RSI/Stoch/etc. Parameters: Individual sections to customize the lengths, sources, and smoothing types for every internal oscillator used.

FAQ

How do I use the external indicator feature? In the "Indicators to Check" section, enable "External Indicator" and then use the source dropdown to select a plot from another script currently loaded on your chart.

Why are some signals appearing and then disappearing? If "Don't Wait for Confirmation" is enabled, signals may appear on the current pivot; however, if price moves significantly, the pivot may shift. Disabling this requires the pivot to be "locked" by subsequent price action.

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