On-chart Wavetrend Divergence with Pivots

The On-chart Wavetrend Divergence with Pivots indicator combines the oscillator-based WaveTrend momentum signals with automated Pivot Point levels to identify potential reversals and key support/resistance zones directly on the price chart. This tool aims to provide traders with a comprehensive view of momentum exhaustion and structural price levels without needing to switch between sub-pane oscillators and the main chart.

Usage

The script is primarily used to identify trend exhaustion through WaveTrend divergences and validate those signals against classic structural levels (Pivots).

• Divergence Signals: The indicator plots colored circles on the chart when a divergence is detected between price and the underlying WaveTrend calculation:
  • Red Circle: Regular Bearish Divergence.
  • Orange Circle: Hidden Bearish Divergence.
  • Green Circle: Regular Bullish Divergence.
  • Aqua Circle: Hidden Bullish Divergence.
• Pivot Levels: These lines serve as dynamic support and resistance. They are often used for setting Take Profit (at R1/R2 or S1/S2) or Stop Loss levels.
• Timeframe Synergy: While the WaveTrend component is a lagging indicator based on EMAs, the Pivot Points act as leading indicators. Combining these two helps filter out false momentum signals that occur in the middle of a range. It is recommended for higher timeframes (H1, H4, D), though settings can be adjusted for scalping.

Details

The script integrates the logic of the WaveTrend oscillator, which calculates the relationship between price (OHLC4) and its EMA to determine overbought/oversold conditions. The divergence logic checks for discrepancies between price action peaks/valleys and the WaveTrend (WT1) peaks/valleys within a user-defined lookback window.

The Pivot Point component supports several calculation methods, including Traditional, Fibonacci, Woodie, Classic, DeMark, and Camarilla. The resolution of these pivots can be set to "Auto," which scales based on the chart timeframe (e.g., displaying Daily pivots on intraday charts and Weekly/Monthly pivots on higher timeframes).

Settings

• WaveTrend Channel Length: The period used for the initial price smoothing (EMA).
• WaveTrend Average Length: The period used to calculate the WaveTrend signal line.
• Divergence Pivot Lookback (Right/Left): Determines the number of bars used to confirm a pivot high or low for divergence detection.
• Lookback Range (Min/Max): Defines the window of bars searched to find a previous peak or valley to compare against the current one.
• Plot [Type] Divergence: Toggles for Bullish, Bearish, Hidden Bullish, and Hidden Bearish signals.
• Type: Selects the Pivot Point calculation method (e.g., Fibonacci, Traditional).
• Pivots Timeframe: Sets the anchor timeframe for pivot levels (Daily, Weekly, etc.).
• Number of Pivots Back: Controls how many historical pivot levels are drawn on the chart.
• Use Daily-based Values: Determines if pivots use daily OHLC data or intraday data (taking extended hours into account).

FAQ

How do I use the different colored circles? The circles represent WaveTrend divergences. Green/Aqua circles suggest potential upward moves (Bullish), while Red/Orange circles suggest potential downward moves (Bearish).

Which Pivot Type should I use? "Traditional" is common for many floor traders, while "Fibonacci" is popular in crypto and forex markets for identifying retracement levels.

How can I access On-chart Wavetrend Divergence with Pivots? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.