ATC OBV Trend DivergenceWhat It Is
The ATC OBV Trend Divergence indicator is a structurally engineered version of On-Balance Volume — one of the oldest and most misunderstood volume tools in technical analysis. Where the standard retail OBV is a raw cumulative line that traders attempt to manually draw trend lines on (a subjective and unreliable process). This version replaces that guesswork with a fully objective, pivot-based structural analysis engine.
The result is an OBV indicator that tells you, with no manual interpretation required, whether volume flow is building in a bullish structure, breaking down in a bearish one, expanding out of a range, or contracting into one — and it flags only the highest-quality divergences between volume flow and price, confirmed by strict multi-condition logic before a signal ever appears on your chart.
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Who It's Built For
This indicator is designed for traders who understand that price alone doesn't tell the full story. If you've ever used a standard OBV and found yourself staring at a messy cumulative line with no clear way to interpret it — this is what OBV should have been from the start.
It works best for:
• Swing traders and intraday traders who want volume-flow confirmation before entering trend trades
• Traders who use divergence as part of a reversal or exhaustion framework and need a tool they can actually trust
• Anyone learning to think beyond price and understand what smart money participation looks like beneath the surface
Recommended instruments: ES, NQ, YM, SPY, QQQ, large-cap equities, major forex pairs Recommended timeframes: 15-minute, 1-hour, 4-hour, daily
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The Core Concept
On-Balance Volume works on a simple principle: when price closes up, the entire bar's volume is added to a running total; when price closes down, that volume is subtracted. Over time, this creates a directional volume-flow line that should trend in the same direction as price if buying and selling pressure are in agreement.
The problem with standard OBV is threefold. First, the raw line is extremely noisy. Second, there's no objective way to define trend structure on it without drawing trend lines manually — which are subjective, brittle, and inconsistent from trader to trader. Third, most retail divergence tools flag anything that remotely resembles a divergence pattern, flooding the chart with signals that don't hold up.
The ATC OBV Trend Divergence solves all three.
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ATC OBV Trend Divergence Enhancements
1. HMA Smoothing Raw OBV is passed through a Hull Moving Average before any calculations are performed. HMA is ATC's standard smoothing method because it reduces noise significantly without introducing the lag bias that plagues SMA or EMA smoothing. The result is a cleaner OBV line that tracks true directional flow without reacting to bar-to-bar noise.
2. Pivot-Based Structure State Engine Instead of asking you to draw trend lines on OBV, the indicator does it objectively. It detects confirmed swing highs and lows on the smoothed OBV using a configurable left/right pivot lookback, then classifies the current volume flow structure into one of eight states:
• Uptrend (HH/HL) — volume flow is making higher highs and higher lows: the cleanest bullish structure
• Downtrend (LH/LL) — volume flow is making lower highs and lower lows: confirmed bearish structure
• Higher High / Lower High — partial structure information as the trend develops
• Higher Low / Lower Low — partial low-side structure
• Expanding — volume flow is making higher highs and lower lows simultaneously: a widening, volatile structure
• Contracting — volume flow is making lower highs and higher lows: compression, often preceding a breakout
• Forming — not enough pivot history yet to classify
This replaces subjective trend line drawing with a discrete, reproducible, rules-based classification you can read at a glance from the HUD.
3. Z-Score Normalized Slope Bias The indicator measures the rate of change in OBV slope over a configurable lookback, then normalizes that slope reading against its own rolling distribution using a Z-score calculation. This means the slope bias (Bullish / Neutral / Bearish) is not based on a fixed threshold — it adapts to the current instrument's behavior over time. When OBV momentum is statistically elevated above its own recent norm, slope bias reads Bullish. When it's statistically suppressed, it reads Bearish. Everything in between is Neutral. No hardcoded levels, no round numbers.
4. Conservative, Pivot-Confirmed Divergence Detection The divergence engine is the indicator's most technically demanding component, and it was built to be strict by design. A divergence signal is only issued when all of the following conditions are met simultaneously:
• Price and OBV each have two confirmed structural pivots of the same type (two highs for bearish divergence, two lows for bullish)
• The price pivots are separated by a minimum number of bars (configurable, default 10) to prevent noise on adjacent swings
• The price pivots are not too far apart (configurable, default 80 bars) to prevent flagging stale patterns
• The price pivot and OBV pivot are temporally close to each other — they're measuring the same swing
• Optionally, the slope bias must not be contradicting the divergence direction (the "Same-Side Slope" filter)
The result is that divergence signals are rare, which is exactly what you want. When the indicator prints a divergence, it means something.
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Reading the Chart
The OBV Line The smoothed OBV line is the primary visual. Its color reflects the current slope bias: green when bullish, red when bearish, grey when neutral. This gives you an at-a-glance read on whether volume flow momentum is trending or flat.
The Baseline A softer line tracks the rolling mean of OBV over the Z-score window. Think of this as the "neutral equilibrium" for OBV on that instrument. When OBV is above the baseline, volume flow is in net positive territory relative to its own recent history. When below, it's in net negative territory. OBV crossing the baseline is one of the six available alerts.
The Fill The area between the OBV line and the baseline is shaded in the current bias color at low opacity. This makes it visually easy to see how far volume flow has extended from equilibrium, and when it's beginning to revert.
Pivot Markers Small triangles appear on the OBV panel at each confirmed structural pivot. Red downward triangles mark OBV swing highs. Green upward triangles mark OBV swing lows. These are the same pivots the structure engine and divergence engine use — seeing them lets you visually confirm what the HUD is reporting.
Divergence Lines When a divergence is confirmed, a dashed line is drawn across the two OBV pivots that created the pattern, and a label is placed at the most recent pivot. Bear divergence lines are red with a "Bear Div" label. Bull divergence lines are green with a "Bull Div" label. Lines only appear after full confirmation — there are no provisional signals on this indicator.
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The HUD
The heads-up display in the corner of the panel gives you a real-time read of the indicator's full state without requiring you to inspect the chart visually. Every field updates on each bar close.
Slope Bias — The current directional read on OBV momentum: Bullish, Bearish, or Neutral. Colored to match the chart.
Slope Z — The raw Z-score driving the slope bias classification. Positive values indicate above-average upward momentum. Negative values indicate below-average, downward-leaning momentum. The threshold for Bullish/Bearish classification is configurable (default ±1.0).
Structure — The current OBV structural state: Uptrend (HH/HL), Downtrend (LH/LL), Expanding, Contracting, or a partial structure label as the pattern develops.
Last Div — The type and age of the most recent confirmed divergence signal. Displayed as "Bull (X bars)" or "Bear (X bars)" where X is how many bars ago the signal fired. Shows a dash if no divergence has been detected.
Div Engine — On or Off, reflecting whether the divergence detection module is enabled in settings.
OBV — Whether smoothed OBV is currently above or below the rolling baseline.
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How to Trade With It
The ATC OBV Trend Divergence indicator is a confirmation and context tool. It is not a standalone entry signal generator. Use it alongside your price action, levels, and primary trend framework.
Step 1 — Establish the volume flow structure. Before considering any trade, check the Structure field in the HUD. An Uptrend (HH/HL) structure on OBV is the highest-confidence bullish volume environment. A Downtrend (LH/LL) is the highest-confidence bearish environment. If the structure reads Expanding, Contracting, or is still Forming, treat that as a low-conviction volume environment and apply higher selectivity to your trade entries.
Step 2 — Check slope bias alignment. The Slope Bias and Slope Z fields tell you whether current OBV momentum is statistically elevated or suppressed. For long bias trades, you want Bullish slope bias. For short bias trades, you want Bearish slope bias. A Neutral reading doesn't cancel a trade but should reduce your conviction — volume flow momentum is not supporting a directional move right now.
Step 3 — Check OBV vs. baseline. For long entries, OBV above the baseline is supportive. For short entries, OBV below the baseline is supportive. A divergence between price position and OBV baseline position — price near highs but OBV below baseline, for example — is worth noting even without a formal divergence signal.
Step 4 — Let divergence signals add weight, not replace analysis. When a Bull Div or Bear Div label appears, treat it as a significant weight-of-evidence addition to a trade you were already building a case for. Bull Div at a key support level, with a Higher Low structure printing on OBV and slope bias turning Bullish, is a high-confidence confluence setup. Bull Div in isolation, in the middle of a trending move with no structural or level support, is just a data point.
Step 5 — Use the alerts to stay hands-free. Set alerts for the events that matter most to your process — divergence confirmations, slope bias flips, or baseline crossovers — so you don't need to watch the panel continuously. The alerts fire only when conditions are fully confirmed.
What a strong long setup looks like: OBV Structure shows Uptrend (HH/HL) or a fresh Higher Low. Slope Bias reads Bullish. OBV is above baseline. Price is pulling back to a known level. Entry on the next confirmed price structure signal from your primary framework.
What a strong short setup looks like: OBV Structure shows Downtrend (LH/LL) or a fresh Lower High. Slope Bias reads Bearish. OBV is below baseline. Price is rallying into a known resistance zone. Entry on the next confirmed rejection signal from your primary framework.
What a high-quality divergence trade looks like: A Bear Div signal prints after price makes a new high but OBV fails to confirm. Structure has been degrading — recent pivots showing Lower High. Slope Z is declining toward neutral. Price is approaching a prior distribution zone. This is an exhaustion setup worth engaging with appropriate risk sizing.
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Alerts
Six alert conditions are available. Configure them in PulseWire's alert panel using "Once Per Bar Close" for all divergence and flip alerts.
• Bullish Divergence — Fires when a fully confirmed bull divergence condition is met (price LL, OBV HL, all confirmation filters passed)
• Bearish Divergence — Fires when a fully confirmed bear divergence condition is met (price HH, OBV LH, all confirmation filters passed)
• Slope Flipped Bullish — Fires on the first bar where slope bias crosses above the Bullish threshold
• Slope Flipped Bearish — Fires on the first bar where slope bias crosses below the Bearish threshold
• OBV Crossed Above Baseline — Fires when smoothed OBV crosses above the rolling mean
• OBV Crossed Below Baseline — Fires when smoothed OBV crosses below the rolling mean
• New Higher High on OBV — Fires when a new structural higher high pivot confirms on OBV
• New Lower Low on OBV — Fires when a new structural lower low pivot confirms on OBV
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Settings Reference
OBV Core
• HMA Smoothing Length (default 14) — Controls the degree of noise reduction applied to raw OBV before any calculations. Increase for smoother, slower-reacting output. Decrease for faster but noisier response.
Pivot Structure
• Pivot Left Bars (default 5) — Number of bars to the left of a swing point that must be lower (for a high) or higher (for a low) for the pivot to confirm.
• Pivot Right Bars (default 5) — Number of bars to the right required for confirmation. Increasing this adds lag but improves signal quality. This is the primary control for how conservative the structure and divergence engines are.
Slope Bias (Z-Score)
• Slope Lookback (default 20) — Bars over which OBV momentum is measured.
• Z-Score Window (default 200) — Rolling history used to build the normalization distribution. Larger values create a more stable baseline against which current slope is measured.
• Slope Z Threshold (default 1.0) — The Z-score magnitude required to classify slope as Bullish or Bearish rather than Neutral. Higher values mean fewer directional readings; lower values are more sensitive.
Divergence Detection
• Enable Divergence Detection — Toggle the divergence engine on or off.
• Minimum Bars Between Pivots (default 10) — Prevents divergence from flagging on two adjacent swings that are too close to represent a meaningful structural comparison.
• Maximum Bars Between Pivots (default 80) — Prevents the engine from connecting pivots that are so far apart the comparison is no longer meaningful.
• Require Same-Side OBV Slope (default on) — An additional confirmation filter. When active, a bullish divergence also requires that OBV slope not be strongly negative at the time of the signal, and vice versa. Recommended to leave on for conservative operation.
Visuals
• Toggle OBV line, baseline, state fill, pivot markers, and divergence lines individually
• Full color control for bullish, bearish, neutral, accent, and pivot marker colors
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Instruments and Timeframes
This indicator has been validated for use on US equity index futures (ES, NQ, YM), their ETF equivalents (SPY, QQQ), large-cap individual equities, and major forex pairs. It is designed for the 15-minute, 1-hour, 4-hour, and daily timeframes. Performance on lower timeframes or low-liquidity instruments is not guaranteed, as OBV structure analysis requires sufficient volume history to produce meaningful pivot sequences.
Indicator
Alien The Bayesian Follower [by Oberlunar] Alien The Bayesian Follower 👁⭐
— Bayesian Gating Filter by Oberlunar
Alien The Bayesian Follower by Oberlunar is a permission layer for execution engines. At its core sits a conjugate Bayesian update that continuously revises the expected edge of each trading cell as live evidence accumulates, and automatically disables cells whose edge has decayed. Empirically, for most of the time, when a long/short gate is active, the price goes in the opposite direction or straight in the trend. Use it at 30 m, with lower TF at 15 m and trade on pullbacks.
The state space is built by crossing three fixed methodologies: a 5-class daily Regime Classifier built on Kaufman Efficiency Ratio, lag-1 autocorrelation of returns, and ATR ratio; a Dragon momentum composite aggregating EMA, RSI, MACD, and TRIX into 5 buckets; and a Pulsar flow composite aggregating OBV, CVD, and price-vs-flow divergences into 5 buckets. The full 5×5 Dragon × Pulsar grid is evaluated only inside the MIXED regime, where four specific bucket combinations carry a statistically significant edge after Bonferroni correction across all 25 cells.
The four surviving cells correspond to two long setups and two short setups. The strongest long edge sits at the intersection of strong bullish momentum and still-neutral flow — the pre-alignment phase where price has turned but order flow hasn't fully confirmed. Full alignment between momentum and flow tends to mark exhaustion. The same asymmetry holds in reverse for the short cells.
Each surviving cell carries a Normal prior representing its expected edge and the uncertainty around it. The Bayesian engine is the heart of the indicator: as the script runs, every walk-forward observation matching a cell updates that cell's prior through a conjugate Normal-Normal step, producing a posterior that shrinks prior and live evidence together via precision weighting. When live samples are few, the posterior stays close to the prior, and the cell relies on its original estimate. When live samples accumulate, the posterior tracks reality and the original prior fades.
Each cell is then assigned a status based on its posterior credible interval. **BORN** means not enough live data yet. **OK** means the credible interval excludes zero with the expected sign and the magnitude remains close to the prior. **DRIFT** means the sign is still correct, but the edge has weakened substantially. **DEAD** means the credible interval includes zero, or the sign has inverted — the cell has lost its edge and is automatically blocked from firing. This is the core defensive feature: strategies decay, and when one of the four cells decays, the Bayesian engine stops trusting it without any manual intervention.
Alerts in strict mode restrict firing to primary cells only (±2).
Permissive mode allows secondary cells (±1) as well.
The dashboard shows the live state of all four cells side by side: prior, posterior with credible interval, sample count, and status. Everything else — the cyberpunk palette, the segmented trend wedges in stay-out zones, the optional alien mascot rotating to follow the local trend — is visual feedback layered on top of the same Bayesian rule.
Enjoy,
By Oberlunar 👁⭐ Indicator
AG Pro OBV Pressure Divergence [AGPro Series]AG Pro OBV Pressure Divergence
Overview
AG Pro OBV Pressure Divergence is a context-aware divergence quality map built around the relationship between price structure and On-Balance Volume pressure.
The script is designed to identify bullish and bearish divergence events, then rank those events by participation quality, structural context, and follow-through behavior. Instead of treating every divergence as equally important, it separates weaker pressure disagreements from more meaningful setups and organizes them into a cleaner decision framework.
This is not a generic divergence marker that prints every local mismatch between price and an underlying series. Its purpose is to classify divergence events through a layered process that includes pivot structure, price displacement, OBV behavior, trend context, confirmation timing, and visual emphasis.
The result is a tool that can be used to study when price and participation begin to disagree, while still preserving a practical chart view that remains readable during live market conditions.
What this script does
- Detects bullish divergence when price forms a lower low while OBV forms a higher low
- Detects bearish divergence when price forms a higher high while OBV forms a lower high
- Filters divergence candidates using pivot separation and ATR-based price swing requirements
- Scores events by quality instead of treating all signals the same
- Highlights the strongest events with more prominent chart objects
- Tracks confirmation and invalidation behavior after the initial event
- Displays a compact summary panel for state, pressure, context, and freshness
Unique Edge
Many divergence tools stop at basic detection. They show a disagreement between price and an oscillator or cumulative volume series and leave the rest to the user.
This script takes a different approach.
Its goal is not to maximize the number of divergence labels on the chart. Its goal is to classify divergence quality.
That difference matters. A simple divergence can appear in noisy conditions, in weak structural locations, or without any meaningful follow-through. In those cases, the event may still be technically valid, but not equally useful from an analytical point of view.
AG Pro OBV Pressure Divergence attempts to address that by combining several layers:
1. Structural divergence detection
2. ATR-normalized price displacement filtering
3. OBV pressure comparison between pivots
4. Local trend context using fast and slow EMA structure
5. Setup monitoring through confirmation and invalidation logic
6. Visual hierarchy that distinguishes lower-quality from higher-quality events
Because of this design, the script is better understood as a divergence classification framework rather than a simple divergence marker.
It is also distinct from breakout, reclaim, or trend continuation tools. It does not evaluate break-retest mechanics, VWAP reclaim logic, or general trend strength as its primary objective. Its focus is the quality of price-versus-participation disagreement.
Methodology
The script begins by identifying swing pivots through a configurable pivot length. These pivots form the structural anchor points used to compare price and OBV behavior.
For bullish divergence:
- price must form a lower low
- OBV must form a higher low
For bearish divergence:
- price must form a higher high
- OBV must form a lower high
After a raw divergence is found, the script applies additional requirements before the event is accepted:
Pivot Separation
A minimum bar gap is enforced between pivots so that tightly packed micro-swings do not dominate the output.
Minimum Price Swing
The distance between the two relevant pivots is measured relative to ATR. This prevents very small structural changes from being treated like full-quality events.
Pressure Evaluation
The OBV relationship between the two pivots is examined to determine whether participation is actually improving or weakening in a meaningful way.
Trend Context
Fast and slow EMA structure is used to frame whether the event is appearing against or within the prevailing price environment.
Contextual Location
The script also evaluates where the event is occurring in its local range structure. This helps separate mid-range noise from more interesting reversal or exhaustion locations.
Scoring
All of the above components contribute to a quality score. That score is then used to separate lower-priority events from stronger ones.
Confirmation
After the initial event, the script tracks a confirmation window. During that window, the setup may confirm, remain pending, expire, or become invalidated.
This layered structure is intentional. The script does not assume that a divergence label alone is enough.
Signal Structure
The script organizes events into a sequence instead of a single binary output.
Event Detected
A new bullish or bearish divergence is found and scored.
Pending State
The event remains active while the script monitors whether follow-through appears within the confirmation window.
Confirmed
If the confirmation condition is met within the allowed window, the event is marked as confirmed.
Invalidated
If price fails the setup before confirmation, the event is marked as invalidated.
Expired
If no confirmation occurs within the defined number of bars, the setup is no longer treated as active.
This state-based behavior is useful because it prevents the chart from presenting all divergence events as finalized conclusions the moment they appear.
Quality Model
The script uses a quality threshold and a premium threshold to distinguish event strength.
Lower-quality events can still be displayed when the user wants a fuller map of all structure, but the script can also be configured to focus only on stronger setups.
This creates three practical layers of interpretation:
Building
A divergence exists, but the score is lower and the event should be treated with more caution.
High
The event passes the main quality threshold and receives stronger visual treatment.
Premium
The event exceeds the premium threshold and receives the strongest category treatment in the script.
This does not mean that premium events are guarantees, and it does not imply that lower-quality events are unusable. It simply reflects that not every divergence deserves the same level of attention.
Panel Summary
The summary panel is intended to give quick context without forcing the user to inspect every label one by one.
The panel includes:
- Bias
A simple view of the current directional background based on the fast and slow EMA relationship.
- Pressure
A quick summary of whether OBV pressure is rising, falling, or mixed.
- Last Event
Shows the most recent detected divergence direction.
- Quality
Displays the score and current classification of the most recent event.
- State
Shows whether the most recent tracked setup is in watch, confirmed, invalidated, or idle state.
- Context
Provides a compact view of the local environment, such as trend-up, trend-down, or range-related placement.
- Freshness
Indicates how many bars have passed since the latest tracked event.
Visual Design
The chart output is intentionally organized with hierarchy.
Qualified events are easier to spot than weaker ones.
Confirmation labels are visually distinct from initial event labels.
Link lines help explain which two pivots created the divergence.
Optional background pulse and active setup zone provide temporary emphasis without permanently dominating the chart.
EMA context remains available but is visually secondary to the divergence structure.
Tooltips are included for key settings so that the logic behind the inputs remains understandable directly from the settings panel.
Signals and Alerts
The script includes alert conditions for the main state transitions:
- New Bullish Pressure Divergence
- New Bearish Pressure Divergence
- Premium Bullish Pressure Divergence
- Premium Bearish Pressure Divergence
- Bullish Pressure Divergence Confirmed
- Bearish Pressure Divergence Confirmed
- Pressure Divergence Invalidated
These alerts are designed to reflect internal script states rather than making claims about future price outcomes.
Key Inputs
Pivot Length
Controls how swings are defined. Higher values reduce noise but may delay detection.
OBV Smoothing
Smooths the OBV series before divergence analysis. Higher values create a cleaner but slower pressure curve.
Minimum Pivot Separation
Prevents overly compressed pivots from producing excessive clustering.
Minimum Price Swing (ATR)
Requires meaningful structural movement before a divergence is accepted.
Quality Threshold
Defines the minimum score required for a divergence to be treated as a qualified event.
Premium Threshold
Defines the score level required for premium classification.
Confirmation Window (Bars)
Controls how long a pending event is monitored before it expires.
Use Close-Based Confirmation
Switches confirmation logic between close-based behavior and intrabar high/low behavior.
Main Label Size
Scales event, confirmation, and invalidation labels.
Panel Text Size
Controls panel readability independently from chart labels.
Drawing Emphasis
Adjusts how visually prominent lines, EMA context, and active zone objects appear on the chart.
How to use it
This script is best approached as a context tool, not as a stand-alone decision engine.
A practical workflow may look like this:
1. Identify whether the panel context is aligned with a broad directional background or whether the market is behaving more like a range.
2. Observe whether a new divergence appears in a meaningful local location rather than in the middle of random price noise.
3. Compare the quality score and classification.
4. Watch whether the event confirms or invalidates within the chosen time window.
5. Combine the information with your own structure, risk, and execution framework.
The script is often more informative when used to reduce attention on weaker disagreements and concentrate on better-formed pressure divergences.
Who it may be useful for
This script may be useful for users who want:
- a more structured way to study price and OBV disagreement
- a cleaner divergence map with stronger visual hierarchy
- a chart that distinguishes raw detection from confirmed follow-through
- a volume-pressure oriented lens that is different from standard oscillator-only divergence tools
It may be less suitable for users who want a high-frequency signal stream, a one-click entry engine, or a tool that treats every local divergence as equally relevant.
Limitations and Transparency
This script has important limitations.
First, divergence is an analytical concept, not a guaranteed turning-point mechanism. A divergence can appear and still fail, extend, or resolve slowly.
Second, the scoring model is a ranking method, not a prediction formula. A higher score does not mean certainty. It only means that the event better satisfies the script's internal conditions.
Third, pivot-based logic requires structure to form. This means the script necessarily depends on completed swing information and will not behave like a forward-only projection model.
Fourth, confirmation and invalidation logic are simplifications intended to organize event follow-through. They do not replace full trade management, execution rules, or independent risk control.
Fifth, any indicator that uses volume-derived inputs depends on the characteristics of the underlying market data. Users should be aware that data quality and market structure can differ across symbols and venues.
This script is therefore best used as a contextual classification tool rather than a complete standalone methodology.
What this script is not
- It is not a guarantee of reversals.
- It is not a promise engine.
- It is not a fully automated trading system.
- It is not a substitute for independent structure analysis or risk management.
- It is not designed to predict every local top or bottom.
- It is not intended to imply that premium signals are always superior in every market condition.
Its purpose is narrower and more practical:
to organize OBV-based divergence events into a more useful analytical framework.
Risk Disclosure
This script is for chart analysis and research purposes only.
It does not provide financial advice, investment advice, portfolio advice, or a guarantee of future market behavior. Market conditions can change quickly, and any signal or classification generated by the script can fail or become invalid.
Users should make independent decisions and apply their own risk controls before acting on any chart output.
In summary
AG Pro OBV Pressure Divergence is a public, chart-based tool for analyzing divergence quality through the interaction of price structure and OBV pressure.
Its main contribution is not that it detects divergence, but that it attempts to rank divergence events by structural relevance, pressure context, and follow-through state.
For users who want a cleaner way to study whether price and participation are beginning to disagree, this script aims to provide a more selective and better-organized framework than a raw all-events divergence marker.
Indicator
Strength of Divergence Across Multiple IndicatorsOverview:
One-stop shop for all your divergence needs, including:
(1) A single metric for divergence strength across multiple indicators.
(2) Labels that make it easy to spot where the truly strong divergence is by showing the overall divergence strength value along with the number of divergent indicators. Hovering over the label shows a breakdown of each divergent indicator and its individual divergence strength value.
(3) Fully customizable, including inputs for pivot lengths, divergence types, and weights for every component of the divergence strength calculation. This allows you to quickly and easily optimize the output for any chart. Don't worry, the default settings will have you covered if you're not interested in what's going on under the hood.
The Divergence Strength Calculation:
The total divergence strength value is the sum of the divergence strengths of all indicators for which divergence was detected at a given bar. Each indicator's individual divergence strength is comprised of two basic components: (1) |ΔPrice| - the magnitude of the change in price over the divergence period (pivot-to-pivot), and (2) |ΔIndicator| - the magnitude of the change in indicator value over the divergence period.
Because different indicators' scales and volatility can vary greatly, the Δ values are expressed in terms of standard deviation to ensure that the values are meaningful and equitable across all indicators and assets/instruments/currency pairs, etc:
|ΔIndicator| = |indicator_value_1 - indicator_value_2| / 2 * StDev(indicator_series,100)
Calculation Weights:
All components of the calculation are weighted and can be modified on the Inputs page in settings (weights are simply multipliers). For example, if you think hidden divergence should carry less weight than regular divergence, you can assign it a lesser weight. Or if you think RSI divergence is worth more than OBV divergence, you can adjust their weights accordingly. List of weights:
Regular divergence weight - default = 1
Hidden divergence weight - default = 1
ΔPrice weight - default = 0.5 (multiplied by the ΔPrice component)
ΔIndicator weight - default = 1.5 (multiplied by the ΔIndicator component)
RSI weight - default = 1.1
OBV weight - default = 0.8
MACD weight - default = 0.9
STOCH weight - default = 0.9
Development for additional indicators is ongoing, as is research into the optimal weight configuration(s).
Other Inputs:
Pivot lengths - specify the number of bars before and after each pivot high/low to consider it a valid candidate for divergence.
Lookback bars and Lookback pivots - specify the number of bars or the number of pivots to look back across.
Price sources - specify separate price sources for bullish and bearish divergence
Display settings - specify how lines and labels should display, including which divergence strength values should show the largest labels. Include/exclude specific divergence types and indicators.
Please report any bugs, or let me know if you have any enhancement suggestions or requests for additional indicators.
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