Divergence OBV RSI

The Divergence OBV RSI indicator provides a comprehensive screener for identifying both regular and hidden divergences between price action and the Relative Strength Index of On-Balance Volume. It helps traders identify potential trend reversals and continuations by highlighting momentum shifts that are often invisible on a standard price chart.

Usage

The indicator can be used to spot four distinct types of signals, which are plotted as labels directly on the oscillator:

• Regular Bullish (D): Occurs when the price makes a lower low but the OBV RSI makes a higher low. This suggests a potential bullish reversal.
• Hidden Bullish (H): Occurs when the price makes a higher low but the OBV RSI makes a lower low. This often suggests trend continuation.
• Regular Bearish (D): Occurs when the price makes a higher high but the OBV RSI makes a lower high. This suggests a potential bearish reversal.
• Hidden Bearish (H): Occurs when the price makes a lower high but the OBV RSI makes a higher high. This often suggests trend continuation.

Traders typically use these signals to confirm entries or exits in alignment with their broader trading strategy.

Details

The script calculates the On-Balance Volume (OBV) and then applies a Relative Strength Index (RSI) calculation to that volume data. This creates a volume-weighted momentum oscillator. To identify divergences, the script uses pivot lookbacks to find significant highs and lows in both the price and the oscillator. If the relationship between price pivots and oscillator pivots diverges within a specified lookback range, a signal is generated.

Settings

• OBV RSI Period: Sets the length used for the RSI calculation applied to the OBV data.
• OBV Source: Determines the price source (e.g., Close) used for OBV calculations.
• Pivot Lookback Right/Left: Defines the number of bars required to confirm a pivot high or low.
• Max/Min of Lookback Range: Controls the window of bars searched to find a previous pivot for divergence comparison.
• Plotting Toggles: Options to enable or disable the display of Regular Bullish, Hidden Bullish, Regular Bearish, and Hidden Bearish signals.

FAQ

How do I access Divergence OBV RSI?

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 "D" and "H" labels?

"D" stands for Divergence (Regular), which typically indicates a possible reversal of the current trend. "H" stands for Hidden Divergence, which usually signals that the current trend is likely to continue.

Can I set alerts for these signals?

Yes, the indicator includes built-in alert conditions for all four divergence types, allowing you to receive notifications when a signal is confirmed on a bar close.