/**
* Divergence Detection
* detectDivergence function
*/
export function detectDivergence(prices, indicatorValues, lookbackPeriod = 20) {
if (prices.length < lookbackPeriod || indicatorValues.length < lookbackPeriod) {
return {
bullishDivergence: false,
bearishDivergence: false,
divergence: null
};
}
const recentPrices = prices.slice(-lookbackPeriod);
const recentIndicators = indicatorValues.slice(-lookbackPeriod);
// Find price and indicator extremes
const priceHigh = Math.max(...recentPrices);
const priceLow = Math.min(...recentPrices);
const priceHighIndex = recentPrices.indexOf(priceHigh);
const priceLowIndex = recentPrices.indexOf(priceLow);
// const indicatorHigh = Math.max(...recentIndicators)
// const indicatorLow = Math.min(...recentIndicators)
// const indicatorHighIndex = recentIndicators.indexOf(indicatorHigh)
// const indicatorLowIndex = recentIndicators.indexOf(indicatorLow)
// Bullish divergence: Price makes lower low, but indicator makes higher low
let bullishDivergence = false;
if (priceLowIndex > priceHighIndex) {
// Price made lower low after high
const priceBeforeLow = recentPrices[priceLowIndex - 1] || recentPrices[0];
const indicatorBeforeLow = recentIndicators[priceLowIndex - 1] || recentIndicators[0];
if (priceLow < priceBeforeLow && recentIndicators[priceLowIndex] > indicatorBeforeLow) {
bullishDivergence = true;
}
}
// Bearish divergence: Price makes higher high, but indicator makes lower high
let bearishDivergence = false;
if (priceHighIndex > priceLowIndex) {
// Price made higher high after low
const priceBeforeHigh = recentPrices[priceHighIndex - 1] || recentPrices[0];
const indicatorBeforeHigh = recentIndicators[priceHighIndex - 1] || recentIndicators[0];
if (priceHigh > priceBeforeHigh && recentIndicators[priceHighIndex] < indicatorBeforeHigh) {
bearishDivergence = true;
}
}
let divergence = null;
if (bullishDivergence) {
divergence = 'bullish';
}
else if (bearishDivergence) {
divergence = 'bearish';
}
return {
bullishDivergence: bullishDivergence,
bearishDivergence: bearishDivergence,
divergence: divergence
};
}
