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Continuous Divergence

Divergence is generally measured on the RSI and limited to finding either:

1. higher highs on the price and lower highs on the RSI ( bearish divergence)
2. lower lows on the price and higher lows on the RSI ( bullish divergence )

Continuous Divergence (CD) does two things differently. Firstly, it uses the MFI as its primary source of data, due to its volume component giving it higher accuracy. Secondly, it doesn't measure discrete divergence - i.e. between peaks and troughs - but rather a continuous divergence measurement.

Essentially it is measuring at any given time, the correlation between the price and the MFI . This is smoothed with a moving average (configurable) to get cleaner lines.

CD is used to detect both a slowing down of momentum on the current trend, and a reversal of trend due to changing momentum.
Skrip open-source

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 a publication is governed by House Rules. You can favorite it to use it on a chart.

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