AetherEdge - Smart RSI Divergence Hunter

The AetherEdge - Smart RSI Divergence Hunter indicator provides an automated divergence detection engine that identifies regular and hidden RSI divergences while filtering signals through price structure and momentum confirmation.

Usage

The Usage section describes how the script can be used to identify potential market reversals or trend continuations. Users can monitor four distinct types of divergence to align with different trading strategies:

• Reversal Trading: Regular Bullish (Price Lower Low + RSI Higher Low) and Regular Bearish (Price Higher High + RSI Lower High) signals indicate potential exhaustion in the current trend, especially when occurring in oversold or overbought zones.
• Trend Continuation: Hidden Bullish (Price Higher Low + RSI Lower Low) and Hidden Bearish (Price Lower High + RSI Higher High) signals identify pullbacks within an established trend, suggesting the primary move is likely to resume.
• Structural Alignment: By enabling the "Require Price Structure Alignment" setting, the indicator will only fire signals that conform to the current market trend (HH/HL/LH/LL), filtering out low-probability counter-trend setups.

Details

The script utilizes a multi-layered technical architecture to ensure signal precision:

• Dual Pivot Tracking: Uses RSI-based pivot detection to identify swing points. It records the two most recent pivots across price, RSI value, and bar index to calculate divergence slopes accurately.
• Structure Engine: A secondary swing detection engine monitors price action to label market structure (Higher Highs, Lower Lows, etc.). This provides a trend-context layer for the divergence logic.
• Confirmation Filters: The indicator includes "Pivot Spacing Control" to prevent noise from clustered pivots and an "OB/OS Confirmation" filter to ensure regular divergences only trigger when momentum has reached extreme levels.
• Visual Output: Historical divergences are plotted with solid (regular) or dashed (hidden) lines. High-conviction signals are marked with star icons, and a real-time dashboard tracks RSI status and the latest detected signal.

Settings

① RSI

• RSI Length: Sets the period for the Relative Strength Index calculation.
• Overbought: Defines the upper threshold (default 70) for momentum exhaustion.
• Oversold: Defines the lower threshold (default 30) for momentum exhaustion.

② Pivot Detection

• Pivot Left/Right: Sets the number of bars required to the left and right of a point to confirm a pivot.
• Max Lookback Bars: Limits how far back the script looks for the previous pivot to form a divergence.
• Min Bars Between Pivots: Minimum distance required between two pivots to validate a divergence, reducing noise.

③ Divergence Types

• Regular Bullish/Bearish: Toggles the detection of standard reversal signals.
• Hidden Bullish/Bearish: Toggles the detection of trend continuation signals.

④ Structure Filter

• Require Price Structure Alignment: When active, filters signals based on whether the market is in an uptrend or downtrend.
• Structure Swing Length: Determines the lookback period for identifying HH/HL/LH/LL points.
• Require RSI OB/OS at signal: When enabled, signals will only trigger if the RSI is within the defined overbought or oversold boundaries.

FAQ

How do I interpret the different star symbols? A solid star (★) represents a Regular Divergence (reversal), while a hollow star (☆) represents a Hidden Divergence (continuation).

Why am I not seeing any signals on my chart? If "Require Price Structure Alignment" or "Require RSI OB/OS" are enabled, the script uses very strict criteria. Try disabling these filters or reducing the "Pivot Right" value for more frequent signals.

How can I access the AetherEdge - Smart RSI Divergence Hunter? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.