LB SQZMOM Divergences

The LB SQZMOM Divergences indicator provides a specialized visualization of the Squeeze Momentum indicator by highlighting divergences between momentum peaks and price action. By connecting the green peaks of the Squeeze Momentum oscillator and comparing their slopes to corresponding price movements, the tool identifies potential trend exhaustion or reversal points where price and momentum disagree.

Usage

The indicator is primarily used to identify trend weaknesses through divergence patterns. A common strategy involves monitoring the slope of price versus the slope of the Squeeze Momentum peaks:

• Bearish Divergence: When price forms an upward slope (/) but the Squeeze Momentum peaks form a downward slope (), it may signal that the current upward trend is losing strength and a downward correction is likely.
• Momentum Squeeze: The tool includes the standard squeeze visualization where the "cross" symbols on the zero line indicate whether the market is in a squeeze (low volatility) or has released (momentum expansion).
• Visual Aids: The script can display divergence lines and labels directly on the indicator pane. Users can also enable the display of calculated degrees to quantify the strength of the divergence.

Details

The script utilizes geometric calculations to determine the degree of the slopes for both price action and momentum peaks. It specifically focuses on "green peaks" (positive momentum). When the slopes of these two elements diverge—meaning they have different angular orientations—the script flags a divergence.

Additionally, the indicator includes a rescaled ADX (Average Directional Index) feature. This rescale attempt maps the ADX (0-100) onto the Squeeze Momentum scale, allowing users to view trend strength alongside momentum without needing a separate pane. This version adapts code from popular implementations by authors LazyBear and "console".

Settings

SQZDiver

• Show degrees: Displays the numerical degrees of the divergence lines relative to the x-axis.
• Show deviation labels: Toggles the visibility of the text labels indicating divergence types.
• Show deviation lines: Toggles the drawing of lines connecting the peaks.

ADX

• Smoothing: Sets the period for ADX smoothing.
• DI Length: Sets the period for the Directional Indicator components.
• Key level: Defines the threshold (default 23) for determining a trending vs. non-trending market.
• Print: Toggles the visibility of the scaled ADX line.

SQZMOM

• BB Length: The period for Bollinger Bands calculation.
• BB MultFactor: The standard deviation multiplier for Bollinger Bands.
• KC Length: The period for Keltner Channel calculation.
• KC MultFactor: The multiplier for Keltner Channels.
• Use TrueRange (KC): Toggles the use of True Range for Keltner Channel calculation.
• Print: Toggles the visibility of the main Squeeze Momentum oscillator.

FAQ

How do I interpret the diagonal symbols in the labels?

The labels use slashes to represent slopes. For example, a top slash (/) over a bottom backslash () indicates that the price is trending up while momentum is trending down, signaling a potential bearish reversal.

Why do the divergence lines sometimes look horizontal?

On certain securities or timeframes where price movement is minimal relative to the scale, the calculated degrees may be near zero. The script treats these values as horizontal lines to maintain visual clarity.

How can I access LB SQZMOM Divergences?

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