PulseWave + Divergence

The PulseWave + Divergence indicator provides a responsive momentum oscillator designed to capture short-term trend changes by analyzing the relationship between the RSI and its moving average. This tool aims to deliver smoother signals than traditional RSI oscillators, helping traders identify bullish and bearish shifts in market dynamics across various asset classes.

Usage

The PulseWave + Divergence can be used as a standalone momentum oscillator or as a confirmation tool for trend reversals. Traders can interpret the oscillator's movement relative to the zero line and defined overbought/oversold levels.

• Zero Line Crosses: When the oscillator line crosses above zero, it indicates bullish momentum. Conversely, a cross below zero suggests bearish momentum.
• Overbought/Oversold: Crossing above the oversold level (-12.0 by default) can signal a potential buy opportunity, while crossing below the overbought level (12.0 by default) suggests a sell opportunity.
• Divergence Detection: The script automatically identifies "Bull" and "Bear" divergences. A bullish divergence occurs when price makes a lower low but the oscillator makes a higher low. A bearish divergence occurs when price makes a higher high but the oscillator makes a lower high.
• Signal Visualization: Users can toggle triangles to appear based on overbought/oversold crosses, zero line crosses, or both to quickly identify execution points.

Details

The PulseWave oscillator is constructed by calculating the Relative Strength Index (RSI) and subsequently applying a Simple Moving Average (SMA) to that RSI. The final oscillator value is derived from the difference: Oscillator = RSI - SMA(RSI).

By focusing on the delta between the RSI and its average, the indicator filters out market noise and emphasizes momentum shifts. The divergence logic utilizes pivot points (swing highs and lows) within a specific lookback window to compare price action against the oscillator's peaks and troughs, providing objective visual confirmation of potential exhaustion.

Settings

• RSI Length: Determines the period used for the underlying RSI calculation.
• RSI MA Length: Sets the period for the moving average applied to the RSI.
• Source: The price data used for calculations (default is Close).
• Overbought/Oversold Level: Sets the horizontal thresholds for extreme momentum readings.
• Calculate Divergence: Toggles the detection and labeling of bullish and bearish divergences.
• Pivot Length: Sets the number of candles required to the left and right to confirm a pivot point for divergence.
• Signal Type: Selects which crossover events trigger visual triangle signals (None, Overbought/Oversold, Zero Line, or Both).
• Gradient Settings: Provides various options to customize the visual appearance, including zero line gradients and oscillator fills.

FAQ

How do I use PulseWave + Divergence?

You can use it to find trend reversals by watching for "Bull" or "Bear" divergence labels or by trading the oscillator's crossovers of the zero line and overbought/oversold levels.

Can I change the sensitivity of the signals?

Yes, by adjusting the RSI Length and RSI MA Length. Higher values will result in a smoother, slower oscillator, while lower values will make the indicator more sensitive to short-term price movements.

How do I get access to this tool?

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