> For the complete documentation index, see [llms.txt](https://chartnation.gitbook.io/documentation/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://chartnation.gitbook.io/documentation/indicators/smart-divergence-engine.md). # Smart Divergence Engine ## Smart Divergence Engine — User Guide (Panel) {% embed url="" %} ### What it is (one-liner) A momentum panel that finds **clean RSI divergences** and a high-energy reversal tell called the **Shark Fin**—so you can spot exhaustion early and time entries with structure. *** ### Quick Start (TL;DR) 1. **Add the indicator** to any chart/timeframe. 2. Look for: * **Bullish Divergence** (RSI rising while price makes a lower low) near or below the **Oversold** line → potential long. * **Bearish Divergence** (RSI falling while price makes a higher high) near or above **Overbought** → potential short. * **Shark Fin** fill outside the bands that **re-enters** → momentum snapback often starts here. 3. **Wait for confirmation**: signals appear only **after a pivot is confirmed**, which takes a few bars by design. 4. Use alerts: “**Bullish/Bearish Divergence (Panel)**” and “**RSI Shark Fin — Bullish/Bearish**”.
*** ### How it works: * **RSI core**: Uses a classic RSI (default **14**) with a gentle smoothing for a cleaner “price line.” * **Volatility bands**: Around that RSI line we draw bands based on a moving average (default **34**) and standard deviation (multiplier **1.618**). Think of them like Bollinger-style rails for momentum. * **Shark Fin**: * When RSI pushes **beyond** the outer band by a small buffer, a **fin** “forms” (soft green fill below or red fill above). * When RSI **re-enters** the band with healthy slope and enough volatility, a **fin confirm** triggers (this is the actionable part). * There’s a built-in **cooldown** so you don’t get spammed. * **Divergences**: * We detect confirmed **swing highs/lows** (pivots) on price. * At each new confirmed pivot we compare price vs. RSI at that same pivot bar. * If price makes a **lower low** but RSI makes a **higher low** → **Bullish divergence**.\ If price makes a **higher high** but RSI makes a **lower high** → **Bearish divergence**. * You’ll see a clean connector line + a tiny dot and a label (“**Bull**” or “**Bear**”). > **Why your signal appears “late”**: a pivot isn’t known until **R** bars have passed on the right side of the swing. That’s intentional—so you get **confirmed** structure, not guesses. *** ### Reading the panel * **OB/OS levels**: Defaults **68/32**, with a dotted **50** midline. * **Gradient “Beauty Mode”** (optional): Purple **above 50**, green **below 50**—purely visual to help you see slope and distance from neutral at a glance. * **Bands** (optional): Show/hide the volatility bands if you prefer a cleaner panel. *** ### Inputs (explained) **Core** * **Price Source**: Default `close`. * **RSI Length**: Default **14**. Higher = smoother, fewer signals. * **Volatility Band Length**: Default **34** (MA window for bands). * **Band Multiplier**: Default **1.618** (wider → fewer fins; tighter → more fins). * **Overbought / Oversold**: Defaults **68/32**. Adjust for your market’s personality. * **Pivot Left / Right**: Defaults **10/10**. Bigger numbers = more reliable, slower confirmations. **Style** * **Beauty mode**: On/off for gradient fill around 50. * **Glow on divergence lines**: Adds a soft halo; **Glow width** and **Main line width** are adjustable. * **Top/Bottom colors & opacities**: Tweak the gradient palette to taste. **Shark Fin** * **Fin depth buffer (RSI pts)**: How far past the band the RSI must go to count as a fin. * **Min band stdev (vol filter)**: Require enough volatility to avoid weak pops. * **Min bars between fins**: Built-in cooldown for cleaner signals. **Show Volatility Bands**: Toggle the outer rails. *** ### Alerts (ready to use) * **RSI Shark Fin — Bullish** * **RSI Shark Fin — Bearish** * **Bullish Divergence (Panel)** * **Bearish Divergence (Panel)** > **Setup**: TradingView → Alerts → “Condition: Smart Divergence Engine” → pick one of the four alertconditions. Choose Once/Every time as you prefer. *** ### Playbook (how to trade it) #### A) Divergence Reversal * **Context**: After a strong move into OB/OS or into HTF support/resistance. * **Trigger**: A **Bull** (or **Bear**) divergence label + line prints. * **Entry**: Conservative—wait for the next candle to confirm structure in your direction. Aggressive—enter on the signal bar close. * **Invalidation**: The **pivot price** that defined the divergence. * **Targets**: First to **midline (50)**, then to the opposite band or recent structure. #### B) Shark-Fin Snapback * **Context**: RSI “sticks out” beyond the band (fin forming), then **re-enters** with slope backing the reversal. * **Entry**: On **fin confirm** (alert) or on the bar close that re-enters. * **Invalidation**: Recent swing extreme or the low/high of the fin excursion. * **Targets**: Band mid / structure; scale out on the first stall. #### C) Stack the Edges (best-of-best) Combine: 1. **Divergence** at structure, 2. **Shark Fin re-entry**, and 3. Market confluence (HTF level, liquidity sweep, session timing).\ These stacked setups tend to be your A-grade trades. *** ### Timeframes & presets | Style | TF | Pivot L/R | Notes | | ------------- | ----- | ------------- | ------------------------------------------------------------------------------------------------ | | **Scalp** | 1–5m | 5 / 5 | Faster confirmations, more signals. Consider a slightly tighter Band Multiplier (e.g., 1.4–1.5). | | **Day trade** | 5–15m | 8–10 / 8–10 | Balanced reliability vs. speed (defaults are great here). | | **Swing** | 1h–4h | 12–20 / 12–20 | Fewer but stronger signals; widen stops to structure not ATR alone. | Tip: If you get **too many** divergence lines, **increase** Pivot L/R. If you get **too few**, **decrease** them or ease the fin filters. *** ### Risk management (must-do) * Place your **stop** beyond the **pivot extreme** that defined the signal. * Size positions so that a single failed divergence is just a **small** account dent. * Scale out on clear inflection zones (50 line, opposite band, prior S/R). * Avoid chasing in **news spikes**—fins can appear frequently when volatility is abnormal. *** ### Common questions **Q: Why didn’t I get a divergence where I “see” one?**\ A: The engine only prints after a **confirmed pivot** and requires the RSI comparison at that **same pivot bar**. If the structure isn’t confirmed yet, it won’t draw. **Q: Can the fin fill show without a confirm?**\ A: Yes. A fin **forms** when RSI is outside the bands; it **confirms** only on re-entry with slope/volatility and cooldown rules. **Q: The lines look thick/bright.**\ A: Turn **Glow** off or reduce **Glow width / Main line width** in Style. **Q: The panel looks different across symbols.**\ A: Markets have different volatility. If fins feel rare, lower **Min band stdev** or **Fin depth buffer** a touch. If they’re too frequent, raise them. *** ### Advanced notes (for power users) * **Confirmation timing**: Signals require **R** right bars; the pivot’s RSI value is taken **at that pivot bar**, not later. * **Band logic**: Bands are MA±σ·k around smoothed RSI; you can turn them off if you only want divergences & fins. * **Lookback**: The script is optimized for **up to 500 bars** on load for stability and speed. *** ### Best practices & pairing * Use this panel together with the [**Smart Divergence Engine Overlay**](/documentation/indicators/smart-divergence-engine-overlay.md) (price-chart lines & labels using the **same logic**). The panel times momentum; the overlay nails the candle anchors and risk levels. * Add **HTF context** (draw key S/R) and a **session bias** (London/NY). * Keep the chart clean; signals are designed to be minimal and readable. *** ### Troubleshooting * **No signals for a while** → Lower **Pivot L/R** or ease **fin** filters; check you’re on a sufficiently volatile symbol/timeframe. * **Too many signals** → Increase **Pivot L/R**, raise **Min band stdev**, or widen **Fin depth buffer**. * **Visual clutter** → Turn off **Bands** or **Glow**, keep gradient on for readability. *** ### Changelog info (what you’re using) * **Version:** Smart Divergence Engine V1 (Panel) * **Defaults:** RSI 14, Bands 34 × **1.618**, OB/OS **68/32**, Pivot **10/10**, gradient on, bands on, divergence lines with optional glow. *** #### Final word Use SDE as your **reversal radar**—let it confirm structure, then execute with discipline. The edge appears often; the win-rate comes from **selection and risk control**. [Join ChartNation](https://chartnation.net/) --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://chartnation.gitbook.io/documentation/indicators/smart-divergence-engine.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. 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