Divergence: Unveiling the Magical Code of Price Reversal

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Hello everyone, I am blackcat1402! Today, we are going to explore a mysterious and exciting technical indicator - divergence. Divergence, doesn't this word sound like a suspenseful plot in a movie? In fact, divergence plays a more thrilling role in the financial market!

If you are a detective in the market, searching for its secrets. Every price fluctuation in the market is like a clue, and divergence is the key that guides you to the truth. Sometimes, divergence is like telling you, "Hey, this price trend looks suspicious, something big might happen!" Yes, divergence is such a mysterious signal that alerts you to an imminent change in market trends.

Divergence has two faces: positive and negative. Positive divergence, like a friendly neighbor, suggests that prices may rise; while negative divergence, like a mischievous troublemaker, indicates that prices may fall. Just like every story in life has two sides, divergence is the same.

Using divergence is like playing a treasure hunt game. You need to focus on the discordant dance between price and other indicators. When the price is waltzing while the indicator is tangoing, that's when divergence appears. This inconsistency is what you need to pay attention to!

However, just like a detective wouldn't draw a conclusion based on just one clue, as traders, we cannot make decisions based solely on divergences. Divergence is just a hint, and true wisdom lies in combining it with other indicators and analysis tools. Only then can you piece together a complete market picture and avoid falling into the trap of misjudgment.

Remember, although divergences are powerful, they are not infallible. They are like a double-edged sword that, if used improperly, can lead to erroneous trading decisions. But if mastered correctly, they can become a strong ally in a complex market.

So, when you encounter a divergence in the market, don't rush to take action. Stop, observe, think, and then make a decision. The market is like a huge puzzle, and divergence may be the key to solving it.

Finally, don't forget that trading is a game of risks and opportunities. Stay cautious, make good use of divergences, and you will find your way in this unpredictable market.

Alright, today's deviation class ends here. I hope you enjoyed this exploration journey! Remember, the market is always full of surprises, so keep your curiosity alive and you will discover endless possibilities!

This code is a script for drawing divergence indicators. It uses TradingView's Pine Script language.

First, the indicator() function is used to set some parameters of the indicator, such as the title, price format, and whether to overlay on the main chart.

Then, some input variables are defined, including whether to plot on price (instead of the indicator), which indicator to use for calculations, the lookback periods for finding pivot points on the right and left sides, and the maximum and minimum values for the search range.

Next, some color variables are defined for use in drawing the graphics.

Then, based on the input variables, it is determined whether to redraw the graphics, and the result is saved in the repaint variable.

After that, conditions for regular bullish divergence, hidden bullish divergence, regular bearish divergence, and hidden bearish divergence are checked separately, and the results are saved in the corresponding boolean variables. Calculations and plotting are done based on the input parameters and conditions. The specific steps are as follows:

Define some color variables and auxiliary variables.

Check if a redraw is needed (repaint).

Use the ta.pivotlow() function to find and check for the existence of low points.

Use the ta.pivothigh() function to find and check for the existence of high points.

Define an auxiliary function _inRange(cond) to count the number of time periods in which a condition is met within a range.

Based on the type of divergence and the set parameters, make the necessary checks and plot the results.

Finally, the plot() function is used to draw lines, and the plotshape() function is used to add text labels. If the conditions are met, lines are drawn and text is displayed at the corresponding positions on the price or indicator.