PPO Divergence Alerts

The PPO Divergence Alerts indicator identifies bullish and bearish divergences between price action and the Percentage Price Oscillator (PPO) to highlight potential trend reversals.

Usage

The Usage section describes how the script can be used, focusing on the visual cues and alert system for momentum-based trading.

Divergence Signals

The indicator plots circles on the PPO line to signify specific market conditions:

• Bullish Divergence: Large teal circles appear when price makes a lower low while the PPO makes a higher low, suggesting a potential upward reversal.
• Bearish Divergence: Large red circles appear when price makes a higher high while the PPO makes a lower high, suggesting a potential downward reversal.

Pivot Points

Smaller, semi-transparent circles identify local peaks and troughs within the oscillator:

• PPO Lows: Greenish circles indicate a local bottom in PPO momentum.
• PPO Highs: Reddish circles indicate a local top in PPO momentum.

These points are used as the foundation for divergence calculations and can serve as early warnings for fading momentum.

Details

The script calculates the Percentage Price Oscillator (PPO) by measuring the percentage difference between a fast and slow Exponential Moving Average (EMA). This value is then smoothed using a Simple Moving Average (SMA).

The divergence logic compares the relationship between price peaks/troughs and PPO peaks/troughs. It accounts for both immediate divergences (where the oscillator and price pivots align closely) and "delayed" or "long-term" divergences. The long-term divergence feature utilizes a broader lookback period to find discrepancies over a more significant timeframe, helping to identify major trend shifts on daily or weekly charts.

Settings

• Use long term Divergences?: Toggles the detection of divergences that occur over a wider range of bars.
• Lookback Period: Sets the number of bars the script looks back to identify long-term highs and lows.
• Fast Length: The period for the shorter Exponential Moving Average.
• Slow Length: The period for the longer Exponential Moving Average.
• Signal Length: The period used for the signal line calculation (internal).
• Smoother: The length of the SMA used to smooth the PPO line.

FAQ

How can I set up alerts for this script? You can use the built-in alert conditions for "Bullish Signal", "Bearish Signal", "PPO High", and "PPO Low" via the alert creation menu to receive notifications when these events trigger on the bar close.

What is the difference between the large circles and small dots? Large circles represent confirmed divergences between price and momentum, whereas the smaller dots represent local pivot points in the PPO itself without necessarily requiring a price discrepancy.

How do I get access to PPO Divergence Alerts? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.