Kase Peak Oscillator w/ Divergences

The Kase Peak Oscillator w/ Divergences indicator is a statistical momentum tool that automatically adapts to cycle length and volatility to identify trend reversals and breakouts. By replacing linear mathematics with logarithmic and exponential models, it provides a more accurate reflection of market dynamics across multiple timeframes and asset classes.

Usage

The Kase Peak Oscillator can be used as both a reversal and a trend-following tool:

• Breakouts/Breakdowns: Look for the oscillator histogram to cross above or below the zero line. A cross above zero suggests bullish momentum, while a cross below suggests bearish momentum.
• Market Extremes (Peak Out): The indicator identifies when the oscillator reaches a statistical extreme. When the histogram breaks beyond the "Max Peak" or "Min Peak" lines and then pulls back, it signals a potential reversal. These are highlighted by thick red (bearish extreme) or green (bullish extreme) bars.
• Divergences: The script automatically detects regular and hidden divergences between price action and the oscillator. Regular divergences (labeled 'R') often signal potential reversals, while hidden divergences (labeled 'H') can suggest trend continuation.

Details

Unlike traditional first-derivative indicators, the Kase Peak Oscillator evaluates over fifty trend lengths simultaneously. It utilizes the log of price changes normalized by a standard deviation of volatility. The core logic involves comparing short-cycle and long-cycle periods to determine momentum strength relative to historical volatility. The "Peak Out" lines are dynamically calculated based on the standard deviation of the oscillator's absolute values, typically set to 90 or a calculated threshold, to define statistically significant overextended conditions.

Settings

Basic Settings

• Deviations: Sets the number of standard deviations used to calculate the Max and Min Peak value lines.
• Short Cycle Period: The minimum lookback length for the statistical evaluation (default is 8).
• Long Cycle Period: The maximum lookback length for the statistical evaluation (default is 65).
• Sensitivity: Adjusts the multiplier for the oscillator's responsiveness.
• Show all peaks?: When enabled, identifies every peak in the histogram; when disabled, only identifies peaks that exceed the statistical thresholds.

UI Options

• Color bars?: Enables price bar coloring based on market extreme signals.
• Mute bars?: When enabled, price bars are dimmed when no significant peak signal is present.

Divergences Settings

• Pivot Lookback Right/Left: Sets the number of bars required to confirm a pivot high or low.
• Max/Min Lookback Range: Defines the range of bars used to search for divergent peaks.
• Plot Bullish/Bearish/Hidden: Toggles the visibility of specific divergence types on the chart.

FAQ

How do I interpret the colored histogram bars?

The thick red and green bars represent "Peak Out" signals. A green bar at a bottom indicates a bullish reversal signal, while a red bar at a top indicates a bearish reversal signal.

What is the difference between the Max and Min Peak lines?

The Max Peak line represents a more significant statistical extreme. A "Peak Out" occurring beyond the Max line is rarer and more significant than one occurring only beyond the Min Peak line.

How can I access Kase Peak Oscillator w/ Divergences?

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