OPEN-SOURCE SCRIPT
PPO Divergence Strategy
PPO Divergence Strategy is a momentum-based trading approach that identifies potential market reversals by analyzing divergences between price action and the Percentage Price Oscillator (PPO).
At its core, the strategy looks for situations where price is making higher highs or lower lows, but the PPO fails to confirm that movement. This mismatch—known as divergence—often signals weakening momentum and a possible shift in trend direction.
A bearish divergence occurs when price forms higher highs while the PPO forms lower highs, suggesting that upward momentum is fading and a downside reversal may be imminent.
A bullish divergence appears when price makes lower lows while the PPO forms higher lows, indicating that selling pressure is weakening and a potential upward reversal could follow.
The strategy typically combines these divergence signals with additional confirmation factors—such as support and resistance levels, trend structure, or signal line crossovers—to refine entries and reduce false signals.
Risk management plays a key role, with trades often structured around recent swing highs/lows or volatility-based stops, ensuring that invalidated setups are exited quickly.
Overall, your PPO Divergence Strategy aims to capture early trend reversals by spotting momentum shifts before they become obvious in price alone.
At its core, the strategy looks for situations where price is making higher highs or lower lows, but the PPO fails to confirm that movement. This mismatch—known as divergence—often signals weakening momentum and a possible shift in trend direction.
A bearish divergence occurs when price forms higher highs while the PPO forms lower highs, suggesting that upward momentum is fading and a downside reversal may be imminent.
A bullish divergence appears when price makes lower lows while the PPO forms higher lows, indicating that selling pressure is weakening and a potential upward reversal could follow.
The strategy typically combines these divergence signals with additional confirmation factors—such as support and resistance levels, trend structure, or signal line crossovers—to refine entries and reduce false signals.
Risk management plays a key role, with trades often structured around recent swing highs/lows or volatility-based stops, ensuring that invalidated setups are exited quickly.
Overall, your PPO Divergence Strategy aims to capture early trend reversals by spotting momentum shifts before they become obvious in price alone.
Open-source script
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
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.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.