Divergences - Elliott Wave Filtered

The Divergences - Elliott Wave Filtered indicator is a multi-oscillator detection system that validates signals through a three-degree Elliott Wave engine and Bayesian probability fusion. It is designed to distinguish between reversal and continuation opportunities by aligning technical divergences with real-time market structure and statistical quality metrics.

Usage

This tool identifies four types of signals based on price-oscillator relationships:

• Regular Bullish (R↑): Price makes a lower low while the oscillator makes a higher low, suggesting a potential reversal upward.
• Regular Bearish (R↓): Price makes a higher high while the oscillator makes a lower high, suggesting a potential reversal downward.
• Hidden Bullish (H↑): Price makes a higher low while the oscillator makes a lower low, indicating trend continuation.
• Hidden Bearish (H↓): Price makes a lower high while the oscillator makes a higher high, indicating trend continuation.

The indicator uses a wave-context gate to filter these signals. For example, Regular divergences are prioritized at Elliott Wave 5 endings or Diagonal terminations, while Hidden divergences are focused on Wave 2 or Wave 4 corrective depths. Users can monitor the dashboard for Hurst Exponent (regime detection) and Bayesian probability scores to gauge signal strength.

Details

The script utilizes several advanced analytical pillars to ensure signal quality:

• Multi-Oscillator Concordance: Requires a minimum number of oscillators (RSI, Stoch RSI, MFI, ROC) to agree before a signal is emitted.
• Tri-Degree Wave Engine: Analyzes Small, Medium, and Large wave degrees independently to verify if the divergence occurs at a significant structural node.
• Bayesian Fusion: A mathematical framework that combines concordance, z-score magnitude, wave context, and market regime (Hurst/Entropy) into a single probability score (0.0–1.0).
• Dynamic Targets: Upon signal confirmation, the tool projects Fibonacci extension levels (61.8%, 100%, 161.8%) and plots an invalidation level based on the recent pivot.

Settings

Divergence Detection

• Pivot Left/Right Bars: Sets the confirmation delay and lookback for pivot detection.
• Min/Max Bars P1→P2: Defines the time window constraints for the divergence legs.
• Require slope non-intersection: When enabled, ensures price does not cross the linear path between pivots for a "clean" signal.

Wave Filter

• Enable wave filter: Toggles the structural filter for Regular or Hidden divergences.
• Degree to check: Selects which wave degree (Small, Medium, Large, or All) must satisfy the filter.
• Allowed wave positions: Toggles specific Elliott Wave contexts like W5, W2, W4, or Corrective C.

Statistical Quality & Bayesian Weights

• Z-score threshold: Sets the sensitivity for oscillator deviation.
• Hurst lookback: Determines the window for regime analysis (mean-reversion vs. trending).
• Min Score: The probability threshold required for a signal to appear on the chart.

FAQ

• How do I interpret the label annotations? The labels follow the format "Type Concordance/Total Score% WavePos". For example, "R↑ 3/4 92% W5" means it is a Regular Bullish divergence with 3 of 4 oscillators agreeing, a 92% probability score, occurring at a Wave 5 position.
• Why do some divergences not show up even if they look valid? The script likely filtered the signal due to low Bayesian probability, a lack of oscillator concordance, or because the price action did not align with the selected Elliott Wave context.
• How can I access Divergences - Elliott Wave Filtered? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.