RSI Divergence

// Bullish RSI Divergene - generally price moves opposite direction

// This source code is subject to the terms of the Mozilla Public License 2.0 at https://mozilla.org/MPL/2.0/
// © ZenAndTheArtOfTrading / www.PineScriptMastery.com
// @version=5
indicator("Pine-Script.com: RSI Divergence", overlay=true)

// Get user input
int i_MaxDistance       = input.int(title="Max Bar Distance", defval=50)
int i_RSI_Length        = input.int(title="RSI Length", defval=14, minval=1)
float i_RSI_Overbought  = input.float(title="RSI Overbought", defval=70.0)
float i_RSI_Oversold    = input.float(title="RSI Oversold", defval=30.0)

// Get RSI value
rsiValue = ta.rsi(close, i_RSI_Length)

// --------- BULLISH DIVERGENCE --------- //
var float checkFirstLow     = na
var float initialLowPrice   = na
var float initialLowRSI     = na
var int initialLowIndex     = na
bool bullishDivergence      = false
float swingLowRSI           = ta.lowest(rsiValue, 5)

// Save lowest low while RSI is oversold, and store it when market leaves OS condition
if (rsiValue < i_RSI_Oversold or rsiValue[1] < i_RSI_Oversold)
    if not na(initialLowPrice)
        initialLowPrice := na
    if na(checkFirstLow) or low < checkFirstLow
        checkFirstLow := low
        initialLowIndex := bar_index
        initialLowRSI := swingLowRSI
else
    // RSI is no longer OS, save lowest price during OS condition and reset temporary low
    if not na(checkFirstLow)
        initialLowPrice := checkFirstLow
    checkFirstLow := na

// Check for a second low that is lower than the first, and with a higher RSI value, and within our max distance
if low[1] < initialLowPrice and low > low[1] and swingLowRSI > initialLowRSI and bar_index - initialLowIndex <= i_MaxDistance
    bullishDivergence := true
    line.new(initialLowIndex, initialLowPrice, bar_index - 1, low[1], color=color.green, width=2)
    initialLowPrice := na

// Draw bearish divergence signal
plotshape(bullishDivergence, "Bullish Divergence", shape.triangleup, location.belowbar, color.green)

// --------- BEARISH DIVERGENCE --------- //
var float checkFirstHigh    = na
var float initialHighPrice  = na
var float initialHighRSI    = na
var int initialHighIndex    = na
bool bearishDivergence      = false
float swingHighRSI          = ta.highest(rsiValue, 5)

// Save highest high while RSI is overbought, and store it when market leaves OB condition
if (rsiValue > i_RSI_Overbought or rsiValue[1] > i_RSI_Overbought)
    if not na(initialHighPrice)
        initialHighPrice := na
    if na(checkFirstHigh) or high > checkFirstHigh
        checkFirstHigh := high
        initialHighIndex := bar_index
        initialHighRSI := swingHighRSI
else
    // RSI is no longer OB, save highest price during OB condition and reset temporary high
    if not na(checkFirstHigh)
        initialHighPrice := checkFirstHigh
    checkFirstHigh := na

// Check for a second high that is higher than the first, and with a lower RSI value, and within our max distance
if high[1] > initialHighPrice and high < high[1] and swingHighRSI < initialHighRSI and bar_index - initialHighIndex <= i_MaxDistance
    bearishDivergence := true
    line.new(initialHighIndex, initialHighPrice, bar_index - 1, high[1], color=color.red, width=2)
    initialHighPrice := na

// Draw bearish divergence signal
plotshape(bearishDivergence, "Bearish Divergence", shape.triangledown, location.abovebar, color.red)

// --------- ALERTS --------- //
if bearishDivergence
    alert("Bearish RSI Divergence Detected - RSI Difference:" + str.tostring(initialHighRSI - swingHighRSI, "#.##"), alert.freq_once_per_bar_close)
if bullishDivergence
    alert("Bullish RSI Divergence Detected - RSI Difference:" + str.tostring(swingLowRSI - initialLowRSI, "#.##"), alert.freq_once_per_bar_close)
alertcondition(bearishDivergence, "RSI Bearish Divergence", "RSI Bearish Divergence Detected")
alertcondition(bullishDivergence, "RSI Bullish Divergence", "RSI Bullish Divergence Detected")