Awesome Oscillator (AO) Divergence Indicator for ThinkorSwim

[BenTen]

This indicator paints your candlesticks when a bullish divergence is found on both the RSI and the Awesome Oscillator and red when bearish divergence is found.

mod note:
Most divergence indicators look amazing in hindsight because they are repainters.
They wait for future pivots, then go back and paint perfect signals on old candles. This one doesn't.
It evaluates only the information available at the current bar, so once a candle closes its signal is locked in. That makes it a much more honest tool for live trading.

For day traders, divergence can be an early clue that momentum is fading before price actually reverses. It won't predict every turn, but it can help identify exhaustion and keep you from chasing moves that are already running out of steam. Used alongside your existing strategy, it adds another piece of context without rewriting history.

thinkScript Code

# Confirmed Divergence
# Assembled by BenTen at useThinkScript.com
# Converted from https://www.tradingview.com/script/PFsMAjcQ-Confirmed-Divergence/

input rsiprd = 14;
input source = close;
input averageType = AverageType.WILDERS;

def NetChgAvg = MovingAverage(averageType, source - source[1], rsiprd);
def TotChgAvg = MovingAverage(averageType, AbsValue(source - source[1]), rsiprd);
def ChgRatio = if TotChgAvg != 0 then NetChgAvg / TotChgAvg else 0;

def RSI = 50 * (ChgRatio + 1);

input length = 30;
input mult = 2.0;
input src = close;

input ob = 70;
input os = 30;
input lengthAO1 = 5;
input lengthAO2 = 34;
def rv = RSI;

def AO = simpleMovingAvg((high + low) / 2, lengthAO1) - simpleMovingAvg((high + low) / 2, lengthAO2);

input x = 5;
input z = 25;

def srcLL = src > lowest(src, x) and lowest(src, x)<lowest(src, z)[x];

def rsiHL = rv > lowest(rv, x) and lowest(rv, x) > lowest(rv, z)[x] and lowest(rv, z)<os;

def aoHL = AO > lowest(AO, x) and lowest(AO, x) > lowest(AO, z)[x] and lowest(AO, x) < 0;

def BullishDiv = srcLL and rsiHL and aoHL;

def srcHH = src < highest(src, x) and highest(src, x)>highest(src, z)[x];

def rsiLH = rv < highest(rv, x) and highest(rv, x) < highest(rv, z)[x] and highest(rv, z)>ob;

def aoLH = AO < highest(AO, x) and highest(AO, x) < highest(AO, z)[x] and highest(AO, x) > 0;

def BearishDiv = srcHH and rsiLH and aoLH;

def basis = simpleMovingAvg(source, length);
def dev = mult * stdev(source, length);

def upper = basis + dev;
def lower = basis - dev;

assignPriceColor(if BullishDiv then color.green else if BearishDiv then color.red else Color.white);

 

[iamtom07]

Ben, instead of painting the bars, would you display the arrow of the first bar of divergence?
Thanks,

 

[BenTen]

@iamtom07 Add the # sign in front of the assignPriceColor code and add the following script at the end of your script:

# Plot Signals
plot bullish = BullishDiv;
bullish.SetPaintingStrategy(PaintingStrategy.BOOLEAN_ARROW_UP);
bullish.SetDefaultColor(Color.CYAN);
bullish.SetLineWeight(1);
plot bearish = BearishDiv;
bearish.SetPaintingStrategy(PaintingStrategy.BOOLEAN_ARROW_DOWN);
bearish.SetDefaultColor(Color.CYAN);
bearish.SetLineWeight(1);

 

[scxpertise]

I mainly swing trades, is this useful for longer timeframes for Daily. Do you have TOS scanners that scan for stocks in a channel b.c I like to use Iron Condor strategy. Thanks

 

[BenTen]

@scxpertise You can always backtest it by looking through your chart's timeframe with this indicator. Add this code to the end of your script and you should be able to scan for new signals. (Watch this video if you don't know how to).

 

[RickK]

Hey @BenTen .....this is awesome! Very useful as I am a reversion to the mean trader. I'm also interested in making the conditions more lenient. I've reset OB/OS to 60/40 with some success and have also set the AO to 5, 20 instead of 5,34. There is one thing that I have a big question about tho. Here's the setup: I find that there are often strong "divergences" when price has simply met the closing price but has not actually met or exceeded (let's say) the lowest low. See the image below. At 9:10 I see a great "divergence", but price hasn't actually met the conditions. I see in your code for this that there is a lot of reference to "highest" and "lowest", but is there a way to modify the code to include conditions where price has simply met the lowest "close" and not the lowest "low"?

Thanks!

 

[MICHIGAN_ROB]

This script accurately identified 26.24 as the lowest RSI within a 25-lookback period. How can I enhance this script by pointing a down arrow at the 26.24 bar (4/6/26) on the chart?

 

[BenTen]

This script accurately identified 26.24 as the lowest RSI within a 25-lookback period. How can I enhance this script by pointing a down arrow at the 26.24 bar (4/6/26) on the chart?

For touching the 26.24 level?

 

[MICHIGAN_ROB]

For touching the 26.24 level?

This might better show what I mean. Script identified 4/6 as the lowest RSI, and it identified 5/4 as the lowest AO. I manually added arrows pointing at these two bars. How do we make the existing script add the two arrows to point at the bars it has identified?