OPEN-SOURCE SCRIPT
Harmony Or Divergence Waves
Updated
This script visually identifies harmony and divergence within the market through an analysis of volume and price action over a specified lookback period. The script highlights these phenomena on the price chart, aiding traders in making informed decisions based on observed patterns.
What It Does:
The script operates on the principle of comparing volume and candle body sizes within two halves of a user-defined lookback period. It aims to detect periods of harmony, where price and volume trends move in synchrony, and periods of divergence, where they do not. Specifically, it:
* Calculates the highest volume and corresponding lowest price point in the first and second halves of the lookback period.
* Determines the increase ratios for price and volume between these two points.
* Visualizes these findings by drawing lines and labels on the chart, with the color indicating harmony (green) or divergence (red).
* Optionally displays a table with detailed metrics and an "End H/D Period" label to mark the analysis boundary.
How It Does It
* It begins by iterating over each candle within the specified lookback period, dividing the period into two halves to compare early and later segments.
* For each half, it identifies the candle with the highest volume and records its volume, the price at its lowest point, and the size of its candle body.
* After identifying these key points, the script calculates ratios of price increase and volume increase from the first half to the second.
* Using these ratios, it determines whether price and volume are moving in harmony or diverging.
* Based on this analysis, it then dynamically draws lines connecting the two key points, with the line color indicating whether the period is classified as harmony or divergence.
* Additionally, it can display a table with the calculated metrics for both points and their ratios, and optionally, a label to mark the end of the analyzed period.
How Traders Might Use It:
It Can Be Used To
* Identifying potential reversal points: Periods of divergence may indicate upcoming changes in market direction, offering traders clues for entry or exit points.
* Confirming trend strength: Harmony between price and volume trends can serve as a confirmation of the current market direction, suggesting a stronger trend that traders might follow.
* Adjusting strategies: By observing the dynamics of price and volume, traders can adjust their trading strategies to better align with market conditions, potentially increasing their chances of successful trades.
* Educational insights: The visual and tabular data provided by the script can help traders understand the relationship between volume and price action, enriching their market analysis skills.
What It Does:
The script operates on the principle of comparing volume and candle body sizes within two halves of a user-defined lookback period. It aims to detect periods of harmony, where price and volume trends move in synchrony, and periods of divergence, where they do not. Specifically, it:
* Calculates the highest volume and corresponding lowest price point in the first and second halves of the lookback period.
* Determines the increase ratios for price and volume between these two points.
* Visualizes these findings by drawing lines and labels on the chart, with the color indicating harmony (green) or divergence (red).
* Optionally displays a table with detailed metrics and an "End H/D Period" label to mark the analysis boundary.
How It Does It
* It begins by iterating over each candle within the specified lookback period, dividing the period into two halves to compare early and later segments.
* For each half, it identifies the candle with the highest volume and records its volume, the price at its lowest point, and the size of its candle body.
* After identifying these key points, the script calculates ratios of price increase and volume increase from the first half to the second.
* Using these ratios, it determines whether price and volume are moving in harmony or diverging.
* Based on this analysis, it then dynamically draws lines connecting the two key points, with the line color indicating whether the period is classified as harmony or divergence.
* Additionally, it can display a table with the calculated metrics for both points and their ratios, and optionally, a label to mark the end of the analyzed period.
How Traders Might Use It:
It Can Be Used To
* Identifying potential reversal points: Periods of divergence may indicate upcoming changes in market direction, offering traders clues for entry or exit points.
* Confirming trend strength: Harmony between price and volume trends can serve as a confirmation of the current market direction, suggesting a stronger trend that traders might follow.
* Adjusting strategies: By observing the dynamics of price and volume, traders can adjust their trading strategies to better align with market conditions, potentially increasing their chances of successful trades.
* Educational insights: The visual and tabular data provided by the script can help traders understand the relationship between volume and price action, enriching their market analysis skills.
Release Notes
- Changed inputs to be more descriptive
- Added toggle for volume labels
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.