RSI Divergence

The RSI Divergence indicator is a dynamic market structure tool that identifies real-time and confirmed momentum divergences between price and various oscillators. It utilizes an adaptive ZigZag algorithm to track structural swing highs and lows, providing traders with high-probability reversal and continuation signals.

Usage

The tool is designed for identifying exhaustion points where price structure and momentum disagree. It can be used for both aggressive entries (using live forming signals) and conservative setups (using confirmed structural pivots). Traders can toggle between Regular Divergences for trend reversals and Hidden Divergences for trend continuation.

Details

The engine uses an adaptive pivot detection system that can operate in Percentage or ATR-based deviation modes. Unlike traditional divergence indicators that only calculate on bar close, this script monitors live forming legs, providing early warnings (marked with a "⚡" symbol). It includes 7 selectable oscillator types—RSI, MFI, CCI, Stochastics, Williams %R, ROC, and CMO—allowing for versatility across different market regimes.

Settings

• ZigZag Configuration: Adjusts the sensitivity of pivot detection using Percentage or volatility-adjusted (ATR) thresholds.
• Oscillator Settings: Selects the momentum engine (e.g., RSI, MFI) and defines its length and exponential smoothing.
• Detection Settings: Toggles Regular or Hidden divergences and chooses between Live (forming) or Confirmed signals.
• Filters:
  • Min Bars Between Pivots: Prevents signals in choppy price action.
  • Min Leg Size %: Ensures only significant price swings are analyzed.
  • Max Leg Ratio: An exhaustion filter to avoid entering extended trends.
  • Require OB/OS Zone: Limits signals to extreme oscillator levels.
• S/R Boxes & Fibonacci Targets: Displays support/resistance zones and automated target levels based on the divergence structure.
• Visual Settings: Controls the appearance of ZigZag lines, leg measurements, and signal colors.

FAQ

• How do I access the RSI Divergence? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
• What is the difference between Live and Confirmed signals? Live signals appear as the current price leg is still forming to provide early entry opportunities, while Confirmed signals only appear once the ZigZag pivot is structurally validated.
• Which oscillator should I use? RSI is recommended for general use, MFI is better for volume-based analysis, and Stochastics is often preferred for range-bound markets.