WaveTrend With Divs & RSI(STOCH) Divs

The WaveTrend With Divs & RSI(STOCH) Divs indicator provides a multi-dimensional analysis of market conditions by integrating WaveTrend, Money Flow Index (MFI), RSI, and Stochastic RSI into a unified diagnostic tool. It identifies both regular and hidden divergences across these indicators to signal potential market reversals and trend continuations.

Usage

The indicator can be used to identify high-probability reversal zones by looking for convergence between multiple oscillators. For example, a bullish scenario might involve the RSI showing a regular bullish divergence while the WaveTrend generates a buy signal from an oversold level, supported by an increasing Money Flow Index.

Conversely, a bearish scenario is often signaled when the RSI displays a bearish divergence at the same time the WaveTrend crosses down from an overbought level, accompanied by decreasing volume pressure. Regular divergences indicate potential reversals, while hidden divergences (where price makes a higher low but the indicator makes a lower low) suggest trend continuation.

Details

This tool functions through the synergy of its core components:

• WaveTrend: Smoothes price data to identify overbought/oversold levels and mean reversion points.
• RSI & Stochastic RSI: Momentum oscillators that track the speed of price movements and the RSI's position within its recent range.
• Money Flow Index (MFI): Adds a volume-weighted dimension to validate whether momentum shifts are backed by actual buying or selling pressure.

The script uses advanced pivot-point detection to identify divergences, allowing for precise tracking of peaks and troughs across both price and indicator data.

Settings

WaveTrend Settings

• WT MA Source: The price data source (default HLC3) used for WaveTrend calculations.
• Length: Adjusts the sensitivity of the WaveTrend moving average.
• WT Channel Length & Average: Controls the smoothing of the WaveTrend bands.
• WT Buy & Sell Signals: Toggles and customizes the visual shapes and colors for entry/exit signals.
• WT OB & OS Levels: Sets the thresholds for overbought (OB) and oversold (OS) conditions.

Money Flow Index

• Fast/Slow MFI Length: Adjusts the lookback periods for volume-weighted pressure.
• MFI Area Multiplier: Controls the visual scale of the money flow shading.

RSI & Stochastic RSI

• RSI Length/Source: Standard parameters for the Relative Strength Index calculation.
• %K & %D Length: Smoothing parameters for the Stochastic RSI components.
• OB/OS Level 1 & 2: Customizable bands for identifying extreme momentum conditions.

Divergence Settings

• Lookback Left/Right: Sets the number of bars required to confirm a pivot point.
• Lookback Range Min/Max: Defines the bar range within which a divergence pattern must occur.
• Regular/Hidden Divergence Labels: Toggles for Bullish and Bearish divergence text and lines.

FAQ

How do I interpret "Hidden" vs "Regular" divergences?

Regular divergences typically signal a potential trend reversal (e.g., price makes a lower low but the indicator makes a higher low). Hidden divergences typically signal trend continuation (e.g., price makes a higher low but the indicator makes a lower low).

Can I set alerts for specific signals?

Yes, the indicator includes a comprehensive alert system. You can set alerts for regular/hidden divergences, WaveTrend buy/sell crosses, or overbought/oversold penetrations through the TradingView alert menu.

How do I access the indicator?

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