This version of the adds the following additional features to the stock UO by Tradingview:
- Optional 3 x Multiple-timeframe overbought and oversold signals, indicating where 3 selected timeframes are all overbought (>80) or all oversold (<20) at the same time, with alert option.
- Optional divergence lines drawn directly onto the oscillator in realtime, with alert options.
- Configurable lookback periods to fine tune the divergences drawn in order to suit different trading styles and timeframes, including the ability to enable automatic adjustment of period per chart timeframe.
- Alternate timeframe feature allows you to configure the oscillator to use data from a different timeframe than the chart it is loaded on.
- Indications where the is crossing down from above the overbought threshold (<80) and crossing above the oversold threshold (>20) levels on a given user selected timeframe, by printing gold dots on the indicator.
- Also includes standard configurable options, including k length, d length, length, length, and source type (close, hl2 , etc)
While this version of the has the ability to draw divergences in realtime along with related settings and alerts so you can be notified as divergences occur without spending all day watching the charts, the main purpose of this indicator was to provide the triple multiple-timeframe overbought and oversold confluence signals and alerts, in an attempt to add more confluence, weight and reliability to the single timeframe overbought and oversold states, commonly used for trade entry confluence. It's primary purpose is intended for scalping on lower timeframes, typically between 1-15 minutes. The triple timeframe overbought can often indicate near term reversals to the downside, with the triple timeframe oversold often indicating neartime reversals to the upside. The default timeframes for this confluence are set to check the 1 minute, 5 minute, and 15 minute timeframes, ideal for scalping the < 15 minute charts.
The popular oscillator has been described as follows:
“The is an indicator used in that ranges between zero and one (or zero and 100 on some charting platforms) and is created by applying the oscillator formula to a set of ( ) values rather than to standard price data. Using values within the formula gives traders an idea of whether the current value is overbought or oversold. The oscillator was developed to take advantage of both momentum indicators in order to create a more sensitive indicator that is attuned to a specific security's historical performance rather than a generalized analysis of price change.”
How do traders use overbought and oversold levels in their trading?
The oversold level, that is when the is above the 80 level is typically interpreted as being 'overbought', and below the 20 level is typically considered 'oversold'. Traders will often use the at an overbought level as a confluence for entry into a short position, and the at an oversold level as a confluence for an entry into a long position. These levels do not mean that price will necessarily reverse at those levels in a reliable way, however. This is why this version of the employs the triple timeframe overbought and oversold confluence, in an attempt to add a more confluence and reliability to this usage of the .
What are divergences?
Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction.
There are 4 main types of divergence, which are split into 2 categories;
regular divergences and hidden divergences. Regular divergences indicate possible trend reversals, and hidden divergences indicate possible trend continuation.
Regular divergence: An indication of a potential trend reversal, from the current downtrend, to an uptrend.
Regular divergence: An indication of a potential trend reversal, from the current uptrend, to a downtrend.
Hidden divergence: An indication of a potential uptrend continuation.
Hidden divergence: An indication of a potential downtrend continuation.
With this indicator you can set alerts to notify you when any/all of the above types of divergences occur, on any chart timeframe you choose, and also when the triple timeframe overbought and oversold confluences occur.
Configurable lookback values.
You can adjust the default lookback values to suit your prefered trading style and timeframe. If you like to trade a shorter time frame, lowering the default lookback values will make the divergences drawn more sensitive to short term price action. By default, this indicator has enabled the automatic adjustment of the periods for 4 configurable timeframes, in a bid to optimise the divergences drawn when the indicator is loaded onto any of the 4 timeframes. These timeframes and the auto adjusted periods on each of them can also be reconfigured within the settings menu.
How do traders use divergences in their trading?
A divergence is considered a leading indicator in , meaning it has the ability to indicate a potential price move in the short term future.
Hidden and hidden divergences, which indicate a potential continuation of the current trend are sometimes considered a good place for traders to begin, since trend continuation occurs more frequently than reversals, or trend changes.
When trading regular divergences and regular divergences, which are indications of a trend reversal, the probability of it doing so may increase when these occur at a strong support or . A common mistake new traders make is to get into a regular divergence trade too early, assuming it will immediately reverse, but these can continue to form for some time before the trend eventually changes, by using forms of support or resistance as an added confluence, such as when price reaches a moving average, the success rate when trading these patterns may increase.
Typically, traders will manually draw lines across the swing highs and swing lows of both the price chart and the oscillator to see whether they appear to present a divergence, this indicator will draw them for you, quickly and clearly, and can notify you when they occur.
Disclaimer: This script includes code from the stock UO by Tradingview as well as the Divergence for Many Indicators v4 by LonesomeTheBlue.
- Replace the option to highlight the range bands with an option to highlight the background colour to make it much clearer.
- added an option to select a different colour for the oversold triple timeframe confluence, to distinguish it from the overbough colour.
-Presented on a naked chart to comply with house rules
-Trimmed whitespace at end of file
- Removed whitespace
- Added a entire secondary set of triple timeframe confluences, able to be enabled or disabled.
- Added options to customise the style of the oscillator lines when they reach overbought and oversold, including conditional colouring and linewidth.
- Added ability to select the colour for the dots plotted when the oscillator crossing down below 80, or crosses up over 20
- Corrected the OB/OS threshold
- Added separate alert for the new secondary MTF OB/OS confluence
- Set divergence lines (show only last) to enabled by default
- Updated the chart image to illustrate the use case and appearance of the 'hide oscillator' / use background colours to signal overbought and oversold feature.
- Renamed and reorganised settings options to make them clearer.
- Disabled the secondary set of MTFoverbought and oversold confluences by default.
- Removed the need for the oscillator line to be overbought in order for the MTF background colour to show overbought, same for oversold.
- Removed need to enable setting 'Highlight MTF OB/OS on oscillator' in order to then enable the MTF confluences on the background colour.
- Altered the default colour of the MTF#2 confluences to distinguish them from the MTF#1 confluences.
- Minor refactor of code / group names
- Renamed variables, removed unused variables.
- Updated divergence alerts to allows for alerting any type of divergence in a single alert.
- Updated alerts to allow for the alerting of overbought and oversold signals on MTF #1 separately.
- Renamed settings text labels for consistency
- Removed the auto-adjust pivot period based on current chart timeframe.
Dans le véritable esprit de TradingView, l'auteur de ce script l'a publié en open-source, afin que les traders puissent le comprendre et le vérifier. Bravo à l'auteur! Vous pouvez l'utiliser gratuitement, mais la réutilisation de ce code dans une publication est régie par le règlement. Vous pouvez le mettre en favori pour l'utiliser sur un graphique.
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