Stochastic_DivergenceMTF
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This script is a specialized technical analysis tool designed for the MetaTrader platform. Its primary purpose is to identify "divergences"—situations where the price movement of an asset contradicts the momentum shown by a specific mathematical indicator. In trading, these divergences are often viewed as early warning signs that the current trend may be losing steam and is about to reverse.
Core Logic Overview
The script focuses on the relationship between two distinct data points:
- Market Price: The actual high and low values of the currency or asset.
- Stochastic Momentum: A secondary calculation that measures the speed and strength of price movements relative to a specific period.
Instead of looking at simple "overbought" or "oversold" levels, this tool scans for structural inconsistencies between these two data sources.
Key Features and Functionalities
1. Divergence Detection
The script automatically monitors the market to find two specific types of discrepancies:
-
Bullish Divergences (Potential Upside): The logic looks for instances where the price is making lower lows, but the momentum indicator is making higher lows. This suggests that while the price is dropping, the "selling pressure" is weakening.
- Classical: A standard signal where price drops but momentum rises.
- Hidden: A trend-continuation signal where the price structure creates a specific pattern relative to the momentum.
-
Bearish Divergences (Potential Downside): The logic looks for instances where the price is making higher highs, but the momentum indicator is making lower highs. This suggests that while the price is rising, the "buying strength" is fading.
- Classical: A standard signal where price rises but momentum falls.
- Hidden: A trend-continuation signal identified by the specific interaction between price peaks and momentum peaks.
2. Multi-Timeframe Analysis
One of the script's professional features is the ability to analyze data from different timeframes (e.g., checking 15-minute, 1-hour, or daily trends) while viewing the chart on your current screen. This allows for a broader perspective on market sentiment without switching windows constantly.
3. Visual Aids and Alerts
To make the data actionable for the user, the script provides several visual layers:
- On-Screen Arrows: It places specific symbols (arrows) at the exact point where a divergence is confirmed.
- Trend Lines: The script can automatically draw lines connecting the peaks and troughs of both the price chart and the indicator window. This helps the user visually confirm the "slope" difference between price and momentum.
- Notifications: If enabled, the script can send real-time alerts to your platform when a new divergence is detected, ensuring you don't miss a potential reversal point while away from the screen.
Summary of Operation
The script operates by constantly scanning past price bars to find "peaks" (high points) and "troughs" (low points). When it identifies a peak or trough in the momentum indicator, it compares it to the corresponding high or low in the market price. If the directions do not match (e.g., price goes down but momentum goes up), it flags a divergence and draws the necessary visual markers for the trader to evaluate.
Indicators Used
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Stochastic_DivergenceMTF
//+------------------------------------------------------------------+
//| edited from FX5_MACD_Divergence_V1.1.mq4 |
//| FX5 |
//|Editor: byens (byens@web.de) hazem@uk2.net |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2007, FX5"
#property link "hazem@uk2.net"
//----
#property indicator_separate_window
#property indicator_buffers 4
#property indicator_color1 Blue
#property indicator_color2 Red
#property indicator_color3 Blue
#property indicator_color4 Red
#property indicator_level1 80
#property indicator_level2 20
//----
#define arrowsDisplacement 0.0001
//---- input parameters
extern string separator1 = "*** Stochastic Settings ***";
/*extern int fastEMA = 12;
extern int slowEMA = 26;
extern int signalSMA = 9;*/
extern int KPeriod=8;
extern int DPeriod=3;
extern int Slowing=3;
extern string separator2 = "*** Indicator Settings ***";
extern bool drawIndicatorTrendLines = true;
extern bool drawPriceTrendLines = true;
extern bool displayAlert = false;
//extern bool alert_ON=false;
extern color ColorBearishTrendLines=SaddleBrown;
extern color ColorBullishTrendLines=MediumSpringGreen;
extern string separator3 = "*** Timeframe Setting (H1=60,H4=240,1440=D1)***";
extern int TimeFrame=15;
//---- buffers
double bullishDivergence[];
double bearishDivergence[];
double macd[];
double signal[];
//----
static datetime lastAlertTime;
static string indicatorName;
//+------------------------------------------------------------------+
//| Custom indicator timeframe function |
//+------------------------------------------------------------------+
string GetTimeFrameStr() {
switch(TimeFrame)
{
case 1 : string TimeFrameStr2="M1"; break;
case 5 : TimeFrameStr2="M5"; break;
case 15 : TimeFrameStr2="M15"; break;
case 30 : TimeFrameStr2="M30"; break;
case 60 : TimeFrameStr2="H1"; break;
case 240 : TimeFrameStr2="H4"; break;
case 1440 : TimeFrameStr2="D1"; break;
case 10080 : TimeFrameStr2="W1"; break;
case 43200 : TimeFrameStr2="MN1"; break;
}
return (TimeFrameStr2);
}
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
SetIndexStyle(0, DRAW_ARROW);
SetIndexStyle(1, DRAW_ARROW);
SetIndexStyle(2, DRAW_LINE);
SetIndexStyle(3, DRAW_LINE);
//----
SetIndexBuffer(0, bullishDivergence);
SetIndexBuffer(1, bearishDivergence);
SetIndexBuffer(2, macd);
SetIndexBuffer(3, signal);
//----
SetIndexArrow(0, 233);
SetIndexArrow(1, 234);
//----
// Show regular timeframe string (HCY)
if (TimeFrame == 0) {
TimeFrame = Period();
}
indicatorName = Symbol()+" ("+GetTimeFrameStr()+"): Stochastic_Divergence(" + KPeriod + ", " +
DPeriod + ", " + Slowing + ")";
SetIndexDrawBegin(3, Slowing);//signalSMA);
IndicatorDigits(Digits + 2);
IndicatorShortName(indicatorName);
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
for(int i = ObjectsTotal() - 1; i >= 0; i--)
{
string label = ObjectName(i);
if(StringSubstr(label, 0, 25) != "Stochastic_DivergenceLine")
continue;
ObjectDelete(label);
}
// ObjectsDeleteAll();
// ObjectDelete(label);
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int countedBars = IndicatorCounted();
if(countedBars < 0)
countedBars = 0;
CalculateIndicator(countedBars);
//----
return(0);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void CalculateIndicator(int countedBars)
{
for(int i = Bars - countedBars; i >= 0; i--)
{
CalculateMACD(i);
CatchBullishDivergence(i + 2);
CatchBearishDivergence(i + 2);
}
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void CalculateMACD(int i)
{
macd[i] = iStochastic(NULL, TimeFrame, KPeriod, DPeriod, Slowing, MODE_SMA, 0, MODE_MAIN, i);
/*iMACD(NULL, 0, fastEMA, slowEMA, signalSMA,
PRICE_CLOSE, MODE_MAIN, i);*/
signal[i] = iStochastic(NULL, TimeFrame, KPeriod, DPeriod, Slowing, MODE_SMA, 0, MODE_SIGNAL, i);
/*iMACD(NULL, 0, fastEMA, slowEMA, signalSMA,
PRICE_CLOSE, MODE_SIGNAL, i); */
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void CatchBullishDivergence(int shift)
{
if(IsIndicatorTrough(shift) == false)
return;
int currentTrough = shift;
int lastTrough = GetIndicatorLastTrough(shift);
// static bool turn_alarm = true;
//----
if(macd[currentTrough] >= macd[lastTrough] &&
Low[currentTrough] <= Low[lastTrough])
{
bullishDivergence[currentTrough] = macd[currentTrough] -
arrowsDisplacement;
//----
if(drawPriceTrendLines == true)
DrawPriceTrendLine(Time[currentTrough], Time[lastTrough],
Low[currentTrough],
Low[lastTrough], ColorBullishTrendLines, STYLE_SOLID);
//----
if(drawIndicatorTrendLines == true)
DrawIndicatorTrendLine(Time[currentTrough],
Time[lastTrough],
macd[currentTrough],
macd[lastTrough],
ColorBullishTrendLines, STYLE_SOLID);
//----
if(displayAlert == true)
DisplayAlert("Classical bullish divergence on: ",
currentTrough);
//----
/* if(alert_ON == true)
{
Alert ("Classical bullish divergence on ",Symbol(),"-",TimeFrame);
PlaySound("timeout.wav");
turn_alarm=false;
}*/
}
//----
if(macd[currentTrough] <= macd[lastTrough] &&
Low[currentTrough] >= Low[lastTrough])
{
bullishDivergence[currentTrough] = macd[currentTrough] -
arrowsDisplacement;
//----
if(drawPriceTrendLines == true)
DrawPriceTrendLine(Time[currentTrough], Time[lastTrough],
Low[currentTrough],
Low[lastTrough], ColorBullishTrendLines, STYLE_DOT);
//----
if(drawIndicatorTrendLines == true)
DrawIndicatorTrendLine(Time[currentTrough],
Time[lastTrough],
macd[currentTrough],
macd[lastTrough],
ColorBullishTrendLines, STYLE_DOT);
//----
if(displayAlert == true)
DisplayAlert("Hidden bullish divergence on: ",
currentTrough);
//----
/* if(alert_ON == true)
{
Alert ("Hidden bullish divergence on ",Symbol(),"-",TimeFrame);
PlaySound("timeout.wav");
turn_alarm=false;
} */
}
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void CatchBearishDivergence(int shift)
{
if(IsIndicatorPeak(shift) == false)
return;
int currentPeak = shift;
int lastPeak = GetIndicatorLastPeak(shift);
static bool turn_alarm = true;
//----
if(macd[currentPeak] <= macd[lastPeak] &&
High[currentPeak] >= High[lastPeak])
{
bearishDivergence[currentPeak] = macd[currentPeak] +
arrowsDisplacement;
if(drawPriceTrendLines == true)
DrawPriceTrendLine(Time[currentPeak], Time[lastPeak],
High[currentPeak],
High[lastPeak], ColorBearishTrendLines, STYLE_SOLID);
if(drawIndicatorTrendLines == true)
DrawIndicatorTrendLine(Time[currentPeak], Time[lastPeak],
macd[currentPeak],
macd[lastPeak], ColorBearishTrendLines, STYLE_SOLID);
if(displayAlert == true)
DisplayAlert("Classical bearish divergence on: ",
currentPeak);
/* if(alert_ON == true)
{
Alert ("Classical bearish divergence on ",Symbol(),"-",TimeFrame);
PlaySound("timeout.wav");
turn_alarm=false;
}*/
}
if(macd[currentPeak] >= macd[lastPeak] &&
High[currentPeak] <= High[lastPeak])
{
bearishDivergence[currentPeak] = macd[currentPeak] +
arrowsDisplacement;
//----
if(drawPriceTrendLines == true)
DrawPriceTrendLine(Time[currentPeak], Time[lastPeak],
High[currentPeak],
High[lastPeak], ColorBearishTrendLines, STYLE_DOT);
//----
if(drawIndicatorTrendLines == true)
DrawIndicatorTrendLine(Time[currentPeak], Time[lastPeak],
macd[currentPeak],
macd[lastPeak], ColorBearishTrendLines, STYLE_DOT);
//----
if(displayAlert == true)
DisplayAlert("Hidden bearish divergence on: ",
currentPeak);
/* if(alert_ON == true)
{
Alert ("Hidden bearish divergence on ",Symbol(),"-",TimeFrame);
PlaySound("timeout.wav");
turn_alarm=false;
} */
}
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
bool IsIndicatorPeak(int shift)
{
if(macd[shift] >= macd[shift+1] && macd[shift] > macd[shift+2] &&
macd[shift] > macd[shift-1])
return(true);
else
return(false);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
bool IsIndicatorTrough(int shift)
{
if(macd[shift] <= macd[shift+1] && macd[shift] < macd[shift+2] &&
macd[shift] < macd[shift-1])
return(true);
else
return(false);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
int GetIndicatorLastPeak(int shift)
{
for(int i = shift + 5; i < Bars; i++)
{
if(signal[i] >= signal[i+1] && signal[i] >= signal[i+2] &&
signal[i] >= signal[i-1] && signal[i] >= signal[i-2])
{
for(int j = i; j < Bars; j++)
{
if(macd[j] >= macd[j+1] && macd[j] > macd[j+2] &&
macd[j] >= macd[j-1] && macd[j] > macd[j-2])
return(j);
}
}
}
return(-1);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
int GetIndicatorLastTrough(int shift)
{
for(int i = shift + 5; i < Bars; i++)
{
if(signal[i] <= signal[i+1] && signal[i] <= signal[i+2] &&
signal[i] <= signal[i-1] && signal[i] <= signal[i-2])
{
for (int j = i; j < Bars; j++)
{
if(macd[j] <= macd[j+1] && macd[j] < macd[j+2] &&
macd[j] <= macd[j-1] && macd[j] < macd[j-2])
return(j);
}
}
}
return(-1);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void DisplayAlert(string message, int shift)
{
if(shift <= 2 && Time[shift] != lastAlertTime)
{
lastAlertTime = Time[shift];
Alert(message, Symbol(), " , ", /*Period()==*/TimeFrame, " minutes chart");
}
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void DrawPriceTrendLine(datetime x1, datetime x2, double y1,
double y2, color lineColor, double style)
{
string label = "Stochastic_DivergenceLine_v1.0# " + DoubleToStr(x1, 0) + TimeFrame;
ObjectDelete(label);
ObjectCreate(label, OBJ_TREND, 0, x1, y1, x2, y2, 0, 0);
ObjectSet(label, OBJPROP_RAY, 0);
ObjectSet(label, OBJPROP_COLOR, lineColor);
ObjectSet(label, OBJPROP_STYLE, style);
}
//+------------------------------------------------------------------+
//| |
//+------------------------------------------------------------------+
void DrawIndicatorTrendLine(datetime x1, datetime x2, double y1,
double y2, color lineColor, double style)
{
int indicatorWindow = WindowFind(indicatorName);
if(indicatorWindow < 0)
return;
string label = "Stochastic_DivergenceLine_v1.0$# " + DoubleToStr(x1, 0) + TimeFrame;
ObjectDelete(label);
ObjectCreate(label, OBJ_TREND, indicatorWindow, x1, y1, x2, y2,
0, 0);
ObjectSet(label, OBJPROP_RAY, 0);
ObjectSet(label, OBJPROP_COLOR, lineColor);
ObjectSet(label, OBJPROP_STYLE, style);
}
//+------------------------------------------------------------------+
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