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Divergence is very common and useful in technical analysis. It indicates possible reversal signals when there are discrepancies between RSI and price movement.
Update Notes: new features and inputs are added.
The chart below is when "wait 1 bar" disabled.
The same chart below is with "wait 1 bar" enabled.
The "wait 1 bar" feature will be able to filter out unnecessary signals before the price trend direction reverse.
By using different swing length, the divergence indicator will be able to detect from short trend to long trend divergence signals.(please check this page for more info about what is swing point, swing high and swing low.)
The chart below used swing length=12, it's a relatively midterm setting based on number of bars on the chart, not based on time or date range. If it's a daily chart, the span will be around 3 months (80 to 90 bars).
The same chart below used swing length=5, it's a relatively short term setting.
The chart below is the extension of the chart above, but we used different SwingLength input, therefore, the signals are different.
Update Notes: added hidden divergence type.
A hidden divergence is where price has a higher LOW, but the indicator has a relative lower value, as shown in the pic below.
There will be a 'H' drawn under a hidden bullish divergence.
A 'R' drawn under a regular bullish divergence.
There will be a 'H' drawn under a hidden bearish divergence.
A 'R' drawn under a regular bearish divergence.
What is RSI Triple Divergence?
The concept of triple divergence is intuitional, if there are three continuous divergences in a row between current High and previous Peak then it will trigger a signal.
For example, a bearish RSI triple divergence is shown in the chart below, bar A is current High, and it has an RSI divergence with bar B which is previous peak. Divergence also exists between A and C (the 2nd previous peak) as well as A and D(the 3rd previous peak).
The following chart is a bullish RSI triple divergence. There is divergence between bar A and bar B (previous trough), bar A and bar C (2nd previous trough), bar A and bar D (3rd previous trough).
I have created many single divergence indicators on different platforms, but they only check the divergence in one of the three terms, short-term, mid-term or long-term. The regular divergence indicator will not exam all three terms at the same time, but Triple Divergence is capable of completing the task.
Sometimes there are too many divergences appear in a short range for the normal divergence indicator.
Let see these two charts below, the first one is Triple Divergence.
The 2nd one is normal divergence which has more signals.
More signals are not necessary a bad thing, but a signal (Triple Divergence) is confirmed via short, mid and long terms could be more solid.
It doesn't necessarily mean the Triple Divergence is definitely better than the normal version, they detect signals from different angles.
Please note that the number of signals is not controlled by this indicator, since it doesn't have the power to influence the market.
There is no guaranty how many signals you will see in a certain period of time. If it concerns you please purchase the 1-month trial first.
You can add new sound files to your NT8\sounds directory.
The following video shows how it plots in real-time.
Just updated the new feature "Enhanced mode".
It also comes with a Market Analyzer which makes it possible to track signals within any timeframe. The input "Range" is used to check if there was a signal within the given number of bars.
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