RSI Divergence
Program 42 consists of a TradeStation Indicator and ShowMe study developed using EasyLanguage that searches for potential divergences between price and the Relative Strength Index (RSI).
The Relative Strength Index (RSI) was developed by J. Welles Wilder and is a momentum oscillator that measures the speed and change of price movements. It oscillates between zero and 100. Some technical analysts believe that bullish and bearish RSI divergence may foreshadow reversals.
In addition to looking for divergence, the program 42 indicator plots RSI and an exponential moving average of RSI.
The program also looks for divergence between price and the RSI. The user may select (by user input) whether to use:
- RSI or
- exponential moving average of RSI (smoothed RSI)
to search for divergence (see user inputs below). The width of the plot of the type of RSI chosen is made wider so that you can easily see which line the program is using.
RSI selector code ‘snippet’ for Gold Pass members
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This content is for members only.
When a potential divergence is found a line is drawn by the indicator between price pivots corresponding to pivots in the RSI. The show me study plots a dot at the later price point. Since price and RSI pivots do not necessarily occur on exactly the same bar, the program has a user input to determine how many bars apart the price pivot and the RSI pivot can occur. The price pivot can occur before the RSI pivot, or vice versa.
The download includes a companion show me study.
The programs were developed in TradeStation 9.0 and work on intraday, daily, weekly, and monthly charts. The indicator may be applied to tick charts, but the pattern text may not display correctly due to an EasyLanguage drawing tool limitations. Because the programs are unprotected you can open them up and see the program code as well as modify it.
MultiChart version
I have also created a MultiCharts edition of the program 42 indicator for use on MultiCharts charts and the MultiCharts market scanner (equivalent to TradeStation’s RadarScreen).
As usual, Gold Pass members get an additional 20% discount off all program and tutorial prices. If you are a Gold Pass member make sure you enter the special coupon code to get 20% discount off these prices.
This program uses a different technique from that employed in some of the earlier CCI divergence programs. I explain this in a video which accompanies the download.
The indicator may be applied to charts, RadarScreen, and/or the scanner. It also includes alert functionality.
Using an ‘early warning’ version of the program
Some users may wish to have an early warning version of the program whereby the right strength of the price or RSI pivots is reduced from the value they would normally use to a value of one. So, for example, if you normally prefer a value of 3 for right strength, you might insert an ‘early warning’ version of the program with a right strength of 1. To distinguish between the 2 versions of the program you can change the color of the lines.
Inputs
MaxArraySize( 3 ), // Maximum = 5. Determines how many previous pivots are compared each time a new price pivot and corresponding TSI pivot are discovered
RSIPrice( C ), // Used in RSI calculation
RSILength1( 10 ), // Used in RSI calculation
RSILength2( 5 ), // Used in Exponential moving average of RSI calculation
WhichRSI( 1 ), // Determines whether the program uses the RSI or the exponential moving average of RSI when calculating divergences
PriceL( L ), // Price used to find low price pivots
PriceH( H ), // Price used to find high price pivots
LowerColor( Darkgreen ), // Color of lines indicating possible bullish divergence
UpperColor( DarkRed ), // Color of lines indicating possible bearish divergence
LineSize( 3 ), // Determines thickness of line drawn on chart
LeftStrength( 3 ), // Left strength of pivots
RightStrength( 2 ), // Right strength of pivots
BarTol( 3 ); // The number of bars within which the price and RSI pivot must occur for the pivots to be considered to have occurred on the same bar
This UNPROTECTED program (i.e. the TradeStation EasyLanguage indicator) and a PDF user guide are available for immediate download for $79.95 by clicking the ‘add to cart’ button to pay using Credit card or PayPal.
A bundled package of program 28 (Stochastic divergence for charts, scanner and RadarScreen), program 30 (True Strength Index (TSI) divergence) and program 42 (RSI Divergence Indicator and Showme Study) is also available for immediate download for $149.95.
The programs were developed in TradeStation 9.0 and work on intraday, daily, weekly, and monthly charts in TradeStation 9.0 and above. The indicator may be applied to tick charts, but the pattern text may not display correctly due to an EasyLanguage drawing tool limitations. Because the programs are unprotected you can open them up and see the program code as well as modify it.
I have also created a MultiCharts edition of the program 42 indicator for use on MultiCharts charts and the MultiCharts market scanner (equivalent to TradeStation’s RadarScreen).
This UNPROTECTED program (i.e. MultiCharts indicator) is available for immediate download for $79.95 by clicking the ‘add to cart’ button to pay using Credit card or PayPal. This download does not include the showme study.
As usual, Gold Pass members get an additional 20% discount off all program and tutorial prices. If you are a Gold Pass member make sure you enter the special coupon code to get 20% discount off these prices.
Bonus materials
BONUS materials | Program 42 | Modified with RSI filter (password required–see the email you received after purchasing Program42 or contact markplex.com)
Please note that any screen shots on this site are examples and are not meant to imply that any of these programs will generate profitable trades. THESE INDICATORS, SHOW ME STUDIES, STRATEGIES AND OTHER PROGRAMS HAVE BEEN INCLUDED SOLELY FOR EDUCATIONAL PURPOSES.
TO THE BEST OF MARKPLEX CORPORATION’S KNOWLEDGE, ALL OF THE INFORMATION ON THIS PAGE IS CORRECT, AND IT IS PROVIDED IN THE HOPE THAT IT WILL BE USEFUL. HOWEVER, MARKPLEX CORPORATION ASSUMES NO LIABILITY FOR ANY DAMAGES, DIRECT OR OTHERWISE, RESULTING FROM THE USE OF THIS INFORMATION AND/OR PROGRAM(S) DESCRIBED, AND NO WARRANTY IS MADE REGARDING ITS ACCURACY OR COMPLETENESS. USE OF THIS INFORMATION AND/OR PROGRAMS DESCRIBED IS AT YOUR OWN RISK.
ANY EASYLANGUAGE OR POWERLANGUAGE TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS (AND PARTS THEREOF) AND ASSOCIATED TECHNIQUES REFERRED TO, INCLUDED IN OR ATTACHED TO THIS TUTORIAL OR PROGRAM DESCRIPTION ARE EXAMPLES ONLY, AND HAVE BEEN INCLUDED SOLELY FOR EDUCATIONAL PURPOSES. MARKPLEX CORPORATION. DOES NOT RECOMMEND THAT YOU USE ANY SUCH TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS (OR ANY PARTS THEREOF) OR TECHNIQUES. THE USE OF ANY SUCH TRADING STRATEGIES, SIGNALS, STUDIES, INDICATORS, SHOWME STUDIES, PAINTBAR STUDIES, PROBABILITYMAP STUDIES, ACTIVITYBAR STUDIES, FUNCTIONS AND TECHNIQUES DOES NOT GUARANTEE THAT YOU WILL MAKE PROFITS, INCREASE PROFITS, OR MINIMIZE LOSSES.
