Divergence Indicators
Try this Don't expect much I am no programmer, I put my second try here 
Some information about divergence which I found in book: "Achelis, Technical Analysis from A to Z".
Divergences.
doesn't agree with the trend of an indicator.
Many of the examples in subsequent chapters (see page )
demonstrate divergences.
The chart in Figure 34 shows a divergence between Whirlpool
and its 14-day CCI (Commodity Channel Index). [See page .]
Whirlpool's prices were making new highs while the CCI
was failing to make new highs. When divergences occur,
prices usually change direction to confirm the trend
of the indicator as shown in Figure 34. This occurs
because indicators are better at gauging price trends
than the prices themselves.MACD.
near occurs when the MACD diverges from the security.
A bearish divergence occurs when the MACD is making
new lows while prices fail to reach new lows. A bullish
divergence occurs when the MACD is making new highs
while prices fail to reach new highs. Both of these
divergences are most significant when they occur
at relatively overbought/oversold levels.Money Flow Index.
If the price trends higher and the MFI trends lower (or vice versa),
a reversal may be imminent.Accumulation/Distribution.
the security's price imply a change is imminent.
When a divergence does occur, prices usually change
to confirm the Accumulation/Distribution. For example,
if the indicator is moving up and the security's price is
going down, prices will probably reverse.ATR.
The Average True Range can be interpreted using
the same techniques that are used with the other
volatility indicators. Refer to the discussion on
Standard Deviation for additional information on
volatility interpretation.CCI.
A divergence occurs when the security's prices are
making new highs while the CCI is failing to surpass its
previous highs. This classic divergence is usually
followed by a correction in the security's price.Momentum.
identical to the interpretation of the Price ROC.
Both indicators display the rate-of-change of a security's price.
However, the Price ROC indicator displays
the rate-of-change as a percentage whereas
the Momentum indicator displays the rate-of-change as a ratio.
As a market peaks, the Momentum indicator will climb sharply
and then fall off-- diverging from the continued upward or sideways movement of the price. Similarly, at a market bottom,
Momentum will drop sharply and then begin to climb
well ahead of prices. Both of these situations result in
divergences between the indicator and prices.It was first introduced by Welles Wilder in an article in
Commodities (now known as Futures) Magazine in June, 1978.
Step-by-step instructions on calculating and interpreting
the RSI are also provided in Mr. Wilder's book, New Concepts in Technical Trading Systems.
The RSI is a price-following oscillator that ranges
between 0 and 100. A popular method of analyzing
the RSI is to look for a divergence in which the security is
making a new high, but the RSI is failing to surpass its previous high.
This divergence is an indication of an impending reversal.
When the RSI then turns down and falls below
its most recent trough, it is said to have completed
a "failure swing." The failure swing is considered
a confirmation of the impending reversal.
As discussed above, divergences occur when
the price makes a new high (or low) that is not confirmed
by a new high (or low) in the RSI. Prices usually correct
and move in the direction of the RSI.Stochastic Oscillator.
having an infinite progression of jointly distributed random variables.
Look for divergences. For example, where prices are making
a series of new highs and the Stochastic Oscillator is failing
to surpass its previous highs.TRIX.
rate-of-change of a triple exponentially smoothed
moving average of the security's closing price.
Divergences between the security and the TRIX can
also help identify turning points.Not everybody knows what the MACD is.
From: Float Analysis Powerful Technical Indicators Using Price and Volume by Steve Woods.
a technical stock indicator that uses a fast and
a slowmoving average to determine when price
up-trends and down-trends are beginning and ending.ND,
Nice summary....
Anybody knows good MQ4 divergence indicators (RSI, MACD or CCI) ?
I searched a lot and never found one for MT4. None of the ones referenced by others in this thread really does the job. So, I developed strict rules and hired a programmer to build one for me. It's still being worked on, but, the results so far are encouraging. See the attached screen shot for two awesome divergence trades today.
I prefer CCI as it tends to deliver cleaner and quicker signals. Of course, it delivers false ones as well, but, that's where having clear exit rules helps.
I suppose if there were a few people willing to contribute toward my cost for getting this thing developed (which currently is $500), I'd consider making it available to the community along with my rules.
Of course, after the indicator is complete, work will begin on the EA which is also based on a very strict set of rules. Divulging that would take a bit more coaxing!
Cheers
Bill
Bill, now that's exactly how a divergence indicator should be! I'd be willing to donate to a fund to release that puppy to the community..
Though, I wish it could be possible that the divergence indicator could use any indicator to plot divergences..
Bill, now that's exactly how a divergence indicator should be! I'd be willing to donate to a fund to release that puppy to the community.. Though, I wish it could be possible that the divergence indicator could use any indicator to plot divergences..
I agree. I specifically requested the programmer make it easy to insert other oscillators, although, the first version won't have direct support for other oscillators. I gather that once I get my hands on the code that part should be easy to handle.
I'd suggest building a trendline break into the entry. You also should be able to name the minimum bars you require between highs or lows in price to control the scale of the divergences you want to track. Otherwise, you have an indicator firing off unprofitable signals. Another consideration is to look at higher time frame trend as a filter.
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
Hi all,
I am looking for an Indicator with show Divergence on the macd version i attach below , with a sound alert signal. Can any one programer help out please.
Thank you.