CVD Divergence Strategy.1.mm

The CVD Divergence Strategy.1.mm indicator provides a systematic approach to identifying market reversals and trend continuations by analyzing Cumulative Volume Delta (CVD) divergences.

Usage

The tool identifies four primary types of signals based on the relationship between price action and the cumulative volume delta:

• Regular Bullish Divergence: Occurs when the price makes a lower low but the CVD makes a higher low, signaling a potential upward reversal.
• Regular Bearish Divergence: Occurs when the price makes a higher high but the CVD makes a lower high, signaling a potential downward reversal.
• Hidden Bullish Divergence: Occurs when the price makes a higher low but the CVD makes a lower low, suggesting a continuation of the current uptrend.
• Hidden Bearish Divergence: Occurs when the price makes a lower high but the CVD makes a higher high, suggesting a continuation of the current downtrend.

The strategy also includes built-in trade execution logic with adjustable Stop Loss and Take Profit percentages, allowing users to backtest the efficacy of these divergences across various assets and timeframes.

Details

The script calculates Cumulative Volume Delta by evaluating the balance between "Bull Power" and "Bear Power" based on price movement relative to the previous close and open. This power balance is then applied to the volume to determine the net delta for each bar.

Divergences are detected by comparing price pivots to CVD pivots. The pivot sensitivity is controlled by the lookback settings, where a larger lookback provides a macro view of divergences, while a smaller lookback captures local, spontaneous shifts in momentum.

Settings

• MA Length: Sets the period for the Moving Average applied to the CVD line.
• Plot MA?: Toggles the visibility of the CVD Moving Average and the associated background fill.
• Pivot Lookback Right: The number of bars to the right of a pivot to confirm its validity.
• Pivot Lookback Left: The number of bars to the left of a pivot to confirm its validity.
• Max of Lookback Range: The maximum distance (in bars) allowed between two pivots for a divergence to be valid.
• Min of Lookback Range: The minimum distance (in bars) required between two pivots for a divergence to be valid.
• Plot Visibility: Individual toggles for Regular Bullish, Hidden Bullish, Regular Bearish, and Hidden Bearish signals.
• Stop Loss %: The percentage away from the entry price used to set a stop loss.
• Take Profit %: The percentage away from the entry price used to set a take profit.

FAQ

How do I interpret the CVD line?

The CVD line represents the running total of volume delta. When it rises, buying pressure is dominant; when it falls, selling pressure is dominant. Signals are generated when this pressure deviates from price action.

Can I use this for manual trading?

Yes, while this is a strategy version, it plots visual labels ("Bull", "H Bull", etc.) and includes alert conditions for manual trade entry.

How do I access CVD Divergence Strategy.1.mm?

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