Bullish divergence
On while price makes a lower low but an indicator makes a higher low, a sign selling is losing force.
It takes the lowest price of the last window bars and compares it with the lowest of the window bars before, and does the same for the indicator. It is on while the price low is lower and the indicator low is higher. The indicator input has no default; on this chart it reads the close, the same series as price, so it never fires here.
How to read it
- Markers sit on the candles on every bar where the divergence holds.
- In a strategy, bind the indicator to a momentum line such as RSI.
- A cluster of markers is one divergence lasting several bars, not several separate ones.
What it outputs
- Bullish divergence
- On while price's window low is lower and the indicator's window low is higher than in the window before.
When it fires
On every bar where the lowest price of the last window bars is below the lowest of the window before while the indicator's lowest is above its lowest of the window before. On this chart it never fires, since both inputs are the close.
Settings
- window
- How many bars each low is taken over, and how far back the earlier low sits. Longer windows compare bigger swings and fire less often; shorter ones catch small wiggles.
Pitfalls
- The lows come from fixed blocks of window bars, not from swing points, so they may not be the lows a chart reader would pick.
- It warns that selling is fading; it does not time a turn, and price can keep falling while it is on.