ADEDA v3

ADEDA v3 - Advanced Divergence and Extended Distance Analysis

ADEDA v3 is a versatile TradingView indicator primarily focused on identifying profitable short duration trades by attempting to signal imminent contrarian moves in established price trends. It combines popular technical tools like RSI, MACD, and CCI with unique relativity settings, comparing the current symbol to major index ETFs (SPY, QQQ, IWM, RSP). With customizable trading modes and settings, ADEDA v3 can adapt to various trading styles and markets.

ADEDA v3 overlays five moving averages on your chart and provides visual signals through indicator shapes and detailed tables. It’s designed to help traders of all levels identify overextended market conditions and make informed decisions.

Key Features

• Moving Average Analysis:
Plots EMA9, EMA21, EMA34, SMA50, and SMA200. Measures the percentage distance of the price from EMA9 and EMA21 to detect overextension.
  
  
• Technical Indicators:
Uses RSI, MACD, and optional CCI to confirm signals.
  
  
• Relativity Settings:
Compares the symbol’s performance to SPY, QQQ, IWM, and RSP using RSI, highlighting overbought or oversold conditions relative to the market.
  
  
• Customizable Modes:
Offers four modes—Normal, Loose, Strict, and Daytrading—with tailored settings for different strategies.
  
  
• Volatility Spike Detection (experimental):
Attempts to filter out signals during high volatility periods using ATR and volume analysis, reducing false positives.
  
  
• Visual Tools:
Displays divergence shapes (! marks) and tables for distances, RSI, and moving average RSI values.
  

Input Parameters

Customize ADEDA v3 to fit your trading needs with these settings:

• Lookback Period (40 default):
Number of bars to calculate historical high absolute distances from EMA9 and EMA21. Increase for more reliability, decrease for faster signals.
  
  
• Threshold (75 default):
Percentage of the historical high distance that the current distance must exceed to trigger an "extended" signal. Higher values mean fewer, stronger signals.
  
  
• Mode (Normal default):
  Normal: Balanced for most markets.
  Loose: More signals, less strict.
  Strict: Fewer, high-confidence signals.
  Daytrading: Optimized for 5-minute intervals for intraday trading.
  
  
• CCI Length (20 default):
Adjusts CCI sensitivity (1-2000). *IMPORTANT* -- This setting must be adjusted individually to each symbol for best results.
• Use CCI (true default):
Toggle CCI on or off in signal calculations.
  
  
• Show Divergence Shapes (true default):
Displays buy/sell shapes on the chart.
  
  
• Show Distance Table (true default):
Shows price distances from EMA9/EMA21 and their status.
  
  
• Show RSI Table (true default):
Displays RSI of relativities to SPY, QQQ, IWM, RSP.
  
  
• Show MA RSI Table (true default):
Shows moving averages of relativity RSI values.
  
  
• Exclude Open & Close (Daytrading) (false default):
In Daytrading mode, skips signals in the first/last 15 minutes of the day.
  

Relativity Settings:

• RSI Length (14): Length for relativity RSI.
  
• MA Length (14): Moving average length for RSI.
  
• Overbought Threshold (70): RSI level for overbought.
  
• Oversold Threshold (35): RSI level for oversold.
  

Volatility Spike Detection (experimental):
Use Volatility Spike Detection (default false): Enable to filter out signals during periods of high volatility.

• ATR Length (8): ATR calculation period.
  
• Baseline Length (50): Baseline for ATR/volume.
  
• ATR Spike Threshold (1.3): Multiplier for ATR spikes.
  
• Volume Spike Threshold (1.2): Multiplier for volume spikes.
  

How to Interpret Signals

Divergence Shapes:

• Downward (!): Potential sell signal (red).
  
• Upward (!): Potential buy signal (green).
  
• Purple (!): Conditions met for 4+ bars. A purple signal indicates unusual momentum/volatility. It is a warning that previous signals have a higher chance of being incorrect/false.
  

Distance Table:
Shows current distances from EMA9/EMA21 vs. historical highs. "Extended" in red (upside) or green (downside) when the threshold is crossed.

RSI Table:
RSI values for relativities. Red = overbought, green = oversold.

MA RSI Table:
Moving averages of relativity RSI. Same color coding as RSI table.

Volatility Spike:
Red background highlights high volatility periods (if enabled).


Usage Tips

Given the nature of the design of the indicator to signal potential short-term contrarian price action, repeated signaling of overbought or oversold conditions can indicate that the symbol is in a longer-term trend that is opposite to individual signaling. In these cases, intrepid users may use the indicator to execute complementary strategies, e.g. selling short-term covered calls against a long term held position when overbought signals appear.

Also, please keep in mind that ADEDA v3 is not designed to provide exit signaling.


Alerts

Set up alerts in TradingView’s "Alerts" tab:

• Current Bar: Triggers on new buy/sell signals.
  
• Last 2 Bars: Triggers if conditions met in the past two bars (great for screeners).
  

Data Requirements

ADEDA v3 fetches SPY, QQQ, IWM, and RSP data for relativity. These index ETFs have been chosen rather than the indexes themselves as most TradingView users should have access to price data for these ETFs without extra add-ons.

Legal Disclaimer

This script is provided "as is," without any warranties or guarantees of any kind, either express or implied. The author is not a financial advisor, and this script should not be considered financial advice. Users are solely responsible for their own trading decisions and should not rely on this script as the basis for any financial actions. The author shall not be held liable for any losses, damages, or claims arising from the use of this script. By using this script, you agree to assume all risks associated with its use and hold the author harmless from any consequences that may result.