Accelerator Oscillator Divergences

The Accelerator Oscillator Divergences indicator identifies potential trend reversals and continuations by detecting discrepancies between price action and the Accelerator Oscillator (AC) momentum.

Usage

This tool can be used to spot both regular and hidden divergences, providing traders with early warnings of momentum shifts.

• Regular Bullish Divergence: Occurs when the price makes a lower low while the oscillator makes a higher low. This suggests that downward momentum is fading, often preceding a bullish reversal.
• Hidden Bullish Divergence: Occurs when the price makes a higher low while the oscillator makes a lower low. This typically indicates a trend continuation.
• Regular Bearish Divergence: Occurs when the price makes a higher high while the oscillator makes a lower high, suggesting upward momentum is weakening.
• Hidden Bearish Divergence: Occurs when the price makes a lower high while the oscillator makes a higher high, often signaling a bearish trend continuation.

Labels and connecting lines are automatically plotted on the oscillator pane to highlight these occurrences.

Details

The Accelerator Oscillator (AC) measures the acceleration or deceleration of the current driving force of the market. It is derived from the difference between a 5-period SMA and a 34-period SMA of the median price (HL2), further smoothed by a 5-period SMA. By applying divergence detection logic to this specific momentum gauge, the script highlights points where price movement lacks the underlying acceleration required to sustain its current direction.

Settings

• AC Fast EMA Length: Sets the period for the fast moving average used in the AC calculation.
• AC Slow EMA Length: Sets the period for the slow moving average used in the AC calculation.
• Pivot Lookback Right: The number of bars to the right of a pivot point required for confirmation.
• Pivot Lookback Left: The number of bars to the left of a pivot point required for identification.
• Max of Lookback Range: The maximum number of bars to look back when searching for a prior pivot to compare for divergence.
• Min of Lookback Range: The minimum number of bars required between two pivots to qualify for a divergence.
• Plot Bullish/Hidden Bullish/Bearish/Hidden Bearish: Toggles the visibility of specific divergence types on the chart.

FAQ

How do I access Accelerator Oscillator Divergences?

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 regular and hidden divergences?

Regular divergences typically signal a potential reversal of the current trend, while hidden divergences usually suggest that the prevailing trend is likely to continue after a retracement.

Can I adjust the sensitivity of the divergence detection?

Yes, by modifying the "Pivot Lookback" and "Lookback Range" settings, you can control how strictly the script identifies peaks and troughs, making it more or less sensitive to market fluctuations.