/**
* Divergence Detection
* detectDivergence function
*/
export interface DivergenceResult {
bullishDivergence: boolean
bearishDivergence: boolean
divergence: 'bullish' | 'bearish' | null
}
export function detectDivergence(
prices: number[],
indicatorValues: number[],
lookbackPeriod: number = 20
): DivergenceResult {
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: 'bullish' | 'bearish' | null = null
if (bullishDivergence) {
divergence = 'bullish'
} else if (bearishDivergence) {
divergence = 'bearish'
}
return {
bullishDivergence: bullishDivergence,
bearishDivergence: bearishDivergence,
divergence: divergence
}
}
