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DivergEngine Original and Divergengine98
DivergEngine Original
DivergEngine Original was introduced with the November/December '95 issue of TS Express. It was the first divergence
tool to introduce the idea of customizable oscillator retracement levels. The idea was to allow the user to specify the level the oscillator had to retrace to after crossing above the overbought or below the oversold levels in order to complete the price move. It gave a
new dimension to the concept of divergence. However, it only works with bounded indicators like RSI and Stochastics. It is not capable of dealing with unbounded indicators. Despite that fact it is still an extremely powerful and flexible user function.
DivergEngine Original features the ability to detect the highest or lowest price swings associated with the extremes reached by the oscillator even though the price extremes may occur on bars other than when the oscillator peaks. In fact the price extreme can even occur after the oscillator reaches the overbought or oversold territory! It will not trigger premature signals while the oscillator is still in the overbought or oversold regions. You can see the DivergEngine Original system and showme in action by looking at some examples.
DivergEngine98
In 1998 I developed a divergence detection utility the uses algorithms radically different from the original. It starts by looking for recent swing highs or swing lows and compares them to the current price. If price is reaching new highs then the algorithm looks at the oscillator to locate the peak reached at about the time the swing high took place and compares the oscillator value then with the current value. If the oscillator is lower now then divergence is signalled. This tool allows the user to use any oscillator he or she wants. The benefit is that it allows unbounded oscillators such as momentum, CCI, MACD etc. Users can insert their own custom oscillators. This tool is called DivergEngine98 and it comes with user functions, a showme and sample systems.
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