Divergences (Pivots)
Nov 10, 2019
The Divergences (Pivots) indicator identifies regular and hidden divergences between price action and the Relative Strength Index (RSI) using pivot points across three distinct lookback periods.
Usage
The tool helps traders identify potential trend reversals or continuations by comparing the highs and lows of price with those of the RSI. Users can monitor three different timeframe sensitivities simultaneously: Short, Medium, and Long.
- Regular Bullish Divergences (Green): Occur when price makes a Lower Low (LL) but the RSI makes a Higher Low (HL).
- Regular Bearish Divergences (Red): Occur when price makes a Higher High (HH) but the RSI makes a Lower High (LH).
- Hidden Divergences (White/Chart Foreground): Signal potential trend continuation.
- Visual Labels: The script uses different arrow symbols to distinguish between the three periods:
- Short: Small arrows (⇡/⇣)
- Medium: Standard arrows (↑/↓)
- Long: Bold/Large arrows (⇧/⇩)
It is recommended to use lower "LeftBars" settings (1 or 2) for weekly or daily charts, and higher values for lower timeframes to filter out noise.
Details
The indicator calculates pivot points for both price and RSI based on user-defined "Left Bars" and "Right Bars." The "Sensitivity" setting determines how many previous pivot points are compared to find a divergence; a higher value (e.g., 5) compares the current pivot with multiple previous values to confirm the divergence strength. By using pivot points instead of simple bar-by-bar comparisons, the script filters for significant structural turns in the market.
Settings
General Settings
- Source pivothigh/low: Determines which price source is used for pivot calculation (default is Close).
- Length RSI: Sets the lookback period for the RSI calculation.
- Source RSI: Determines the price source for the RSI calculation.
- Sensitivity Divergences: Adjusts how many previous pivot points are compared.
- [xLeftBars = xRightBars]: Toggle to force symmetry between left and right lookback bars.
Period Settings
- Show 'Long/Medium/Short' Period: Toggles the visibility of divergences for each specific lookback length.
- LeftBars (Long/Medium/Short): Defines the number of bars to the left of a peak/trough required for a pivot.
- RightBars (Long/Medium/Short): Defines the number of bars to the right of a peak/trough required for a pivot.
Visibility
- Show Hidden Divergences: Toggles the display of hidden (continuation) divergences.
- Show HH - LH - HL - LL: Toggles the display of price and RSI structure labels for further technical analysis.
FAQ
How do I interpret the different arrow sizes?
The arrows represent different lookback periods. Small arrows are for Short-term pivots, standard arrows for Medium-term, and large block arrows for Long-term structural divergences.
Can I use this for hidden divergences only?
Yes, you can toggle regular divergences off or change the settings to specifically highlight hidden divergences by using the "Show Hidden Divergences" checkbox.
How can I access Divergences (Pivots)?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
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