MTF Real Time ATR Divergences

The ATR Divergences indicator identifies discrepancies between price action and market volatility to highlight potential trend reversals and continuation patterns. By using the Average True Range (ATR) as an oscillator, this tool detects regular and hidden divergences based on pivot points.

Usage

This indicator can be used to spot shifts in market momentum and volatility relative to price. Divergences are categorized into four types:

• Regular Bullish Divergence: Occurs when price makes a lower low while the ATR makes a higher low. This suggests a potential upward reversal as volatility fails to confirm the price drop.
• Regular Bearish Divergence: Occurs when price makes a higher high while the ATR makes a lower high, suggesting a possible downward reversal.
• Hidden Bullish Divergence: Occurs when price makes a higher low but the ATR makes a lower low, signaling a potential bullish trend continuation.
• Hidden Bearish Divergence: Occurs when price makes a lower high but the ATR makes a higher high, indicating a potential bearish trend continuation.

Traders can use these signals to anticipate exhaustion in a trend or to confirm the strength of an existing trend.

Details

The script utilizes pivot point detection (looking back 9 bars and forward 1 bar) to identify significant highs and lows in the ATR oscillator. It then compares these oscillator pivots to the corresponding price pivots. Unlike standard momentum oscillators (like RSI), using ATR for divergence analysis focuses specifically on the relationship between price direction and the range of price movement (volatility).

Settings

• ATR Length: Sets the lookback period for the Average True Range calculation.
• Regular Bullish: Enables or disables the detection and plotting of Regular Bullish divergences.
• Hidden Bullish: Enables or disables the detection and plotting of Hidden Bullish divergences.
• Regular Bearish: Enables or disables the detection and plotting of Regular Bearish divergences.
• Hidden Bearish: Enables or disables the detection and plotting of Hidden Bearish divergences.
• Wait for candle close: When enabled, the indicator will only plot signals once the current bar has closed, preventing the recalculation of signals on the real-time bar.

FAQ

How do I interpret ATR Divergences?

Regular divergences typically suggest that the current trend is losing steam and a reversal may occur, whereas hidden divergences often point toward a continuation of the prevailing market direction.

Does this indicator repaint?

By default, the indicator may plot signals on the current bar. To ensure signals are fixed and do not recalculate, enable the "Wait for candle close" option in the settings.

How can I access ATR Divergences?

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