Divergence – RSI & Volume with optional OBV/OI confirm (v6)

Divergence — RSI & Volume with optional OBV/OI confirmation

Overview
This indicator highlights bullish/bearish divergences between price and RSI and can optionally require a Volume divergence too. For further confluence, it can check OBV or Open Interest (OI) trend/structure as a confirmation filter. The goal is to surface potential exhaustion or continuation areas across multiple forms of momentum/participation—not to provide trade signals.

What it looks for:

*RSI divergences (regular & hidden):
*Regular bullish: Price makes a lower low while RSI makes a higher low.
*Regular bearish: Price makes a higher high while RSI makes a lower high.
*Hidden bullish: Price makes a higher low while RSI makes a lower low (trend-continuation).
*Hidden bearish: Price makes a lower high while RSI makes a higher high (trend-continuation).

Volume divergence (optional):
Price makes a new swing extreme without supportive volume, or volume makes a diverging swing relative to price.

Confirmation (optional):

• OBV: requires OBV to agree with (or fail to confirm) price at the swing, per your filter setting.
  
• OI: for markets with open interest data; checks whether OI supports or contradicts the move.
  

How it works (methodology)
Divergences are detected using confirmed swing points (pivot highs/lows). A swing is confirmed only after enough bars to the right have printed.

While a swing is forming, potential signals may appear and disappear; once the swing confirms, the plot is fixed.

Volume and OBV/OI checks are applied at the same swing points to avoid look-ahead bias.

Key inputs

1. RSI: length & source.
   
2. Swing settings: left/right bars (pivot strength), minimum spacing between swings.
   
3. Divergence types: enable/disable regular and hidden (bullish/bearish) separately.
   
4. Volume filter: toggle on/off; choose interpretation (e.g., lower participation on new price extreme).
   
5. Confirmation source: None / OBV / OI and its strictness (must confirm vs must diverge).
   

Visuals: show/hide labels & lines, label side (left/right), colors, and max lookback markers.
Data availability: If OI is not available for the symbol/exchange, OI confirmation is automatically skipped.

What it draws
*Clear labels/markers at the confirmed swing bar, color-coded for bullish vs bearish and regular vs hidden.
*Optional connector lines between the last two relevant swing points for price and RSI.
*(If enabled) small badges indicating VOL, OBV, or OI confirmation status.


Notes & limitations

This is a charting tool. It does not generate trade recommendations or guarantees.

Divergence is context-dependent; many valid divergences fail in strong trends.

Signals depend on pivot confirmation; earlier bars may repaint until the swing is locked in.

OI is only present on instruments/exchanges that provide it; otherwise, OI checks do nothing.

Different chart sessions/aggregation (e.g., Heikin Ashi, RTH vs ETH) will produce different swing/RSI outcomes.

Best practices

Use divergences as confluence with structure (S/R, trends), higher-timeframe bias, and risk controls.

Prefer confirmed swings; be cautious with early prints.

Consider requiring Volume and OBV/OI filters in strong-trend environments to reduce noise.

Disclaimer
For educational purposes only. This is not financial advice or a solicitation to buy/sell any asset. Trading involves risk; do your own research and manage risk appropriately.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.


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Disclaimer
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