Enhanced Momentum Divergence Radar+

The Enhanced Momentum Divergence Radar+ indicator is a technical analysis tool designed to detect momentum shifts and divergence patterns to help traders identify potential trend reversals and continuation points. It utilizes normalized momentum readings and volatility-adjusted smoothing to enhance market timing for entries and exits.

Usage

The indicator can be used to gauge the current strength of a trend and anticipate potential exhaustion. Traders can interpret the visual output as follows:

• Histogram Analysis: Green bars indicate strong upward momentum, while red bars indicate strong downward momentum. Neutral values are displayed in a faded gray color.
• Divergence Signals: The tool automatically plots "𝓞𝓢" (Oversold/Bullish) and "𝓞𝓑" (Overbought/Bearish) labels. A Bullish Divergence occurs when the price makes a lower low while the momentum oscillator makes a higher low. Conversely, a Bearish Divergence occurs when the price makes a higher high while the momentum oscillator makes a lower high.
• Thresholds: The dynamic bands provide reference points for extreme momentum levels, helping to identify overextended market conditions.

Details

The Enhanced Momentum Divergence Radar+ relies on several core calculations to provide a normalized view of market cycles:

• Detrended Price Oscillator (DPO): The script calculates the difference between the current price and a Simple Moving Average (SMA) from a past period to isolate cyclical movements.
• Volatility Adjustment: An ATR-based volatility calculation is used to adjust the sensitivity of the momentum reading dynamically.
• Normalization: The momentum score is normalized using historical maximum values, ensuring the output scales consistently between -1.00 and 1.00.
• Smoothing: An Exponential Moving Average (EMA) is applied to the normalized score to reduce noise and provide a clearer signal.

Settings

• Lookback Period: Sets the length used for the SMA in the DPO calculation and the ATR volatility measurement.
• Momentum Smoothing Period: Adjusts the length of the EMA applied to the normalized momentum result.
• Color Price Chart Bars: When enabled, colors the main chart candles based on the momentum state.
• Bar Color Transparency: Controls the opacity of the price chart bar coloring.
• Divergence Lookback: Determines the window used to look for local highs and lows for divergence detection.
• Show Overbought (𝓞𝓑) Labels: Toggles the visibility of bearish divergence markers.
• Show Oversold (𝓞𝓢) Labels: Toggles the visibility of bullish divergence markers.

FAQ

How do I use the momentum score table?

The table provides a real-time numerical reading of the normalized momentum. Values close to 1.00 or -1.00 indicate extreme momentum levels, often coinciding with overbought or oversold conditions.

What is the difference between the histogram colors?

The colors represent momentum strength relative to dynamic thresholds. Green signifies strong bullish momentum, red signifies strong bearish momentum, and gray signifies momentum within normal, non-extended ranges.

How can I access Enhanced Momentum Divergence Radar+?

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