RC Tools - Divergence DetectorRC Tools — Divergence Detector
────────────────────────────────────────────────────────────────────
█ OVERVIEW
Most divergence tools pattern-match swing highs and lows, which is finicky and often technically repaints — pivots can un-confirm as new bars form. This tool instead measures rolling correlation between price and a momentum oscillator of your choice. When price and momentum stop agreeing, that disagreement is the divergence — measured continuously, not detected as a one-off pattern.
█ WHAT IT DOES
Plots the rolling correlation between price and a selectable oscillator (RSI, MACD line, Rate of Change, or a custom source) on a -1 to +1 scale. Classifies each confirmed bar into one of three states — Confirmed Trend, Bearish Divergence, Bullish Divergence — colours the chart background accordingly, and shows a table with the current state, how long price has been in it, and historical base rates (average forward return and win rate) for each divergence state.
█ THE THEORY BEHIND IT
A genuine trend has price and momentum moving together — new highs accompanied by strengthening momentum, new lows by weakening momentum. When that relationship breaks down — price continues in one direction while the oscillator stops confirming it — that is a divergence. Rather than searching for specific swing-point patterns (which depend on exactly which pivots you pick and can shift as price continues), this tool asks the more direct statistical question: over the last N bars, how closely have price and the oscillator actually moved together? A strong positive correlation means they agree. A correlation that has dropped toward zero or negative means they have stopped agreeing, regardless of what any single pivot looks like.
█ HOW IT IS CALCULATED
1. Compute the selected oscillator: RSI, MACD line (fast EMA minus slow EMA), Rate of Change %, or a custom source you provide.
2. Compute the rolling Pearson correlation between price (close) and the oscillator over a configurable window (default 14 bars).
3. If that correlation falls below a threshold (default 0.0), price and momentum are no longer confirming each other — a divergence state.
4. The divergence is labelled Bearish if price has been rising over a short lookback (momentum failing to confirm continued strength) or Bullish if price has been falling (momentum failing to confirm continued weakness).
Classification occurs ONLY on confirmed bar close — the state and the displayed correlation are computed and committed together, so they can never disagree mid-bar or flip back and forth as the current bar forms.
█ SETTINGS & CONFIGURATION
• Oscillator (default RSI) — RSI / MACD Line / Rate of Change % / Custom Source
• RSI / MACD / Rate of Change lookbacks (defaults 14 / 12+26 / 20)
• Correlation Window (default 14 bars) — how far back the co-movement is measured
• Divergence Threshold (default 0.0) — the correlation level below which price and momentum are considered to have stopped agreeing
• Price Direction Lookback (default 5 bars) — used only to label a divergence bullish or bearish
• Forward Return Window (default 20 bars) — the horizon used for the base-rate table
• Paint Main Chart Background — toggle off if you only want the correlation pane
█ HOW TO USE IT
Use it as a warning flag on an existing trend read, not as a standalone entry signal. Example: if you're long into a rally and the background flags Bearish Divergence, that's a cue to tighten risk management or look for confirmation elsewhere before assuming the move continues unchecked — it is not, by itself, a sell signal. Check the base-rate table's sample count before treating any single divergence reading as meaningfully predictive.
Works on any asset and timeframe with sufficient history for the correlation window.
█ LIMITATIONS
• Divergence describes a PRESENT disagreement between price and momentum. It does not predict a reversal, and any use of it as a forecast is a misuse.
• Correlation is measured over a rolling window and is noisy by nature — expect it to cross the threshold repeatedly in choppy, range-bound conditions.
• The oscillator itself is not plotted, only its correlation with price — this keeps the pane on one consistent scale regardless of which oscillator is selected (RSI is bounded 0-100, MACD line is unbounded, etc.).
• The bullish/bearish label depends on a short price-direction lookback, which can flip near genuine turning points independently of the correlation reading itself.
• Historical base-rate stats need a meaningful sample count (check N) before being trusted, especially for less common states.
• This script does NOT repaint. All classification updates on confirmed bar close only.
█ DISCLAIMER
For educational and informational purposes only. Nothing here is financial advice. Past behaviour of any divergence state does not indicate future results. Trade at your own risk.
Indicator
Multi-Timeframe Momentum Divergence with Reliability ScoringMulti-Timeframe Momentum Divergence with Reliability Scoring
A momentum divergence on your chart timeframe is far more reliable when the bigger picture leans the same way. This script measures momentum divergence on your chart, only counts it when enough higher timeframes point in the signal's direction, then scores — in real time — whether those gated divergences have actually been worth trading on your symbol, and which way.
What it plots
A normalised momentum oscillator with stretch bands and divergence markers, connecting pivot-to-pivot lines, and a plain-language panel that turns the statistics into a verdict. By default the chart stays minimal — the oscillator plus the verdict panel — with optional key-info and per-class tables you can switch on in settings.
Why these components are combined, and how they work together
Three classical pieces are fused into one pipeline — not stacked as independent signals:
A z-scored momentum oscillator (chart timeframe) — locates where price and momentum disagree, i.e. the divergence.
A higher-timeframe agreement gate — checks momentum direction on three configurable higher timeframes and requires a minimum number to align before a divergence is allowed to fire. This filters out the counter-trend divergences that fail inside a strong higher-timeframe move.
A binomial-proportion confidence test — asks, for each divergence class, whether the expected move followed more often than a same-zone baseline would deliver.
Part 1 finds the divergence, part 2 keeps only those backed by the higher-timeframe trend, and part 3 decides whether the survivors have actually paid on this instrument, by direction. The parts are interdependent — remove any one and the script can no longer answer its core question: "is this momentum divergence worth trading here, and which way?"
How to read it
The verdict panel translates the statistics into four states:
GREEN — edge confirmed: these gated divergences have beaten a same-spot baseline here. Worth acting on.
RED — no edge here: they've lost to a coin-flip. Skip them, require more higher-timeframe agreement, or change the timeframe set.
AMBER — unproven: edge not statistically established yet; treat as low-confidence.
GREY — learning: still collecting completed samples.
It also shows "Best signal" (the direction carrying the strongest measured edge), "Higher TFs" (how many of your three higher timeframes currently agree), "Reward : risk" (the average best vs worst move after a signal, in ATR — below 1:1 means signals hurt more than they help), and the market regime. The optional key-info and per-class tables (off by default) show the per-timeframe breakdown and the full per-direction track record.
A divergence is simply price making a higher high / lower low while the momentum line does the opposite — counted only when enough higher timeframes lean that way.
What's original
Standard multi-timeframe tools just colour-code higher-timeframe trend, and standard divergence tools just mark the divergence. This one fuses higher-timeframe agreement into the divergence filter, then keeps a self-updating, confidence-scored, per-class track record against a same-zone baseline — so you see not just that a divergence printed, but whether and how it has paid once the higher timeframes were on board, and which direction is carrying it.
Universal across markets
Reads only the chart's own price (the source is configurable in settings) plus the same symbol on three higher timeframes, so it runs on any symbol, any timeframe, in any market with no external data. Defaults target NIFTY futures; change the source, lengths or timeframes for other instruments.
Outputs for other scripts
Generic EXP_* values — oscillator, signal, probability, edge, edge lower-bound, sample count, regime and higher-timeframe confluence — are published to the Data Window so other indicators can read them via input.source().
Concept credits
Relative-strength momentum and average true range — J. W. Wilder. Binomial score confidence interval — E. B. Wilson. Trend-efficiency regime measure — P. Kaufman. Multi-timeframe confluence and divergence — classical technical analysis.
Disclaimer
For research and education only. This is not financial advice, not a recommendation to buy or sell, and not a guarantee of future results. All performance shown is in-sample and past-only. Markets carry risk — do your own research and manage your own risk. Indicator
Equilibrium Momentum Shift + Divegence [BigBeluga]🔵 OVERVIEW
Equilibrium Momentum Shift is a range-based momentum oscillator designed to measure how far price has deviated from its current equilibrium.
Instead of focusing purely on trend direction or overbought/oversold conditions, this indicator evaluates price relative to the midpoint of its recent range and quantifies the strength of the shift away from that balance.
By combining normalized range deviation, smoothing techniques, and nonlinear compression, the indicator provides a clear view of when markets transition from equilibrium into directional momentum, now featuring Normal Divergence detection to spot potential trend reversals.
🔵 CONCEPT
Equilibrium Midpoint — The midpoint between the highest high and lowest low over the selected range length represents the equilibrium price.
Deviation Measurement — The indicator measures how far the current price has moved away from this midpoint.
Range Normalization — Deviations are normalized relative to the size of the current range, allowing the oscillator to remain consistent across different volatility conditions.
Momentum Compression — A hyperbolic tangent function compresses extreme values, stabilizing the oscillator and preventing runaway signals during large trends.
Divergence Identification — Automatically identifies discrepancies between price action and the oscillator to highlight weakening momentum in established trends.
🔵 HOW IT WORKS
1️⃣ Equilibrium Range Calculation
The indicator calculates the highest high and lowest low over the user-defined range length.
The midpoint between these two levels forms the equilibrium line.
This midline represents the center of balance for recent price activity.
2️⃣ Price Deviation Measurement
The distance between the current close and the equilibrium midpoint is calculated.
This deviation is then smoothed using a double EMA structure to reduce noise.
The smoothed value is normalized relative to half of the current range size.
3️⃣ Nonlinear Oscillator Transformation
A hyperbolic tangent function compresses normalized deviations into a stable range between -1 and +1.
This transformation prevents extreme outliers and creates a more interpretable oscillator.
4️⃣ Momentum Histogram
A signal line is generated using EMA smoothing.
The difference between the oscillator and the signal line forms a histogram.
The histogram behaves similarly to a MACD-style momentum indicator:
Expanding bars indicate strengthening momentum.
Contracting bars indicate weakening momentum.
5️⃣ Normal Divergence Logic
Bullish Divergence: Occurs when price makes a Lower Low , but the Equilibrium Oscillator makes a Higher Low . This suggests that despite the price drop, the selling pressure relative to equilibrium is fading.
Bearish Divergence: Occurs when price makes a Higher High , but the Equilibrium Oscillator makes a Lower High . This indicates that the buyers' ability to push price away from the midpoint is losing strength.
🔵 KEY FEATURES
Equilibrium midpoint plotted directly on the chart.
Range-normalized momentum oscillator.
Hyperbolic tangent compression to stabilize signals.
MACD-style histogram for momentum acceleration detection.
Automatic Normal Divergence labels to spot exhaustion.
Gradient-colored oscillator line reflecting directional bias.
Dashboard displaying real-time momentum metrics.
🔵 DASHBOARD METRICS
Shift — Current oscillator value showing how far price has moved from equilibrium.
State — Market regime derived from oscillator thresholds:
Bullish
Bearish
Neutral
Range Position — Location of price inside the current range expressed as a percentage.
Pressure — Magnitude of momentum deviation from equilibrium.
🔵 HOW TO USE
Use the equilibrium midline as a dynamic balance reference.
When the oscillator moves above zero, bullish momentum dominates.
When the oscillator moves below zero, bearish momentum dominates.
Trading Divergences: Watch for divergence labels when price is at historical range extremes. A bullish divergence near the "Lowest Low" of the range suggests a high-probability mean-reversion trade back toward equilibrium.
Histogram expansions highlight momentum acceleration.
Histogram contraction can signal potential momentum exhaustion.
🔵 INTERPRETING MOMENTUM SHIFTS
Oscillator near zero → Market is balanced around equilibrium.
Oscillator above 0.2 → Bullish momentum phase.
Oscillator below -0.2 → Bearish momentum phase.
Divergence Label + Oscillator Flatline → High probability of a trend reversal or deep pullback.
Rapid oscillator expansion → Strong directional pressure.
Oscillator flattening → Momentum compression or consolidation.
🔵 CONCLUSION
Equilibrium Momentum Shift offers a structured way to analyze how price behaves relative to its recent balance point.
By measuring normalized deviations from equilibrium and visualizing momentum shifts with a smoothed oscillator, histogram, and integrated divergence analysis , the indicator helps traders identify when markets transition from balance into directional movement.
This makes it especially useful for spotting early momentum expansions, trend continuation signals, and potential exhaustion points where price is likely to snap back to its equilibrium midpoint. Indicator
Indicator
Indicator
Indicator
