Divergence and Sentiment

Adaptive Market Intelligence (AMI) + Multi-Indi Sentiment & Divergence Dashboard

Core Market Philosophy

This indicator integrates adaptive trend detection with multi-dimensional market sentiment analysis to provide a comprehensive view of current market conditions. By combining Kaufman's Adaptive Moving Average (KAMA) with oscillator-based divergence detection, the system identifies both directional bias and potential reversal zones before they manifest on price.

Trend & Structure Analysis

The KAMA component dynamically adjusts its smoothing factor based on market noise, making it highly responsive during trending phases and increasingly stable during choppy conditions. This adaptive nature allows the indicator to:

• Filter market noise while preserving genuine trend signals

• Detect sideways regimes where trend-following strategies typically fail

• Monitor institutional-level volatility spikes using ATR-based adaptive thresholds

Multi-Timeframe Bias Assessment

The system evaluates trend alignment across nine timeframes simultaneously (M1 to MN1). This provides a hierarchical market structure view, revealing whether shorter timeframes are trading in harmony with higher timeframe bias. Strong directional conviction emerges when 7+ timeframes agree on trend direction.

Sentiment & Momentum Dashboard

Four key momentum oscillators provide real-time market condition assessment:

• RSI Sentiment Meter - Measures buying/selling pressure distribution over lookback period, identifying overbought/oversold extremes and directional strength

• OsMA Momentum - Tracks the relationship between MACD and its signal line, indicating bullish/bearish momentum acceleration

• Stochastic Position - Identifies oversold/overbought conditions and potential exhaustion zones

• MACD Trend Strength - Confirms primary trend direction and momentum divergence

Divergence Detection System

The indicator continuously scans for hidden and regular divergences between price action and oscillator behavior:

• Bullish Divergence - Price makes lower lows while oscillator forms higher lows, suggesting underlying buying pressure despite selling exhaustion

• Bearish Divergence - Price makes higher highs while oscillator forms lower highs, indicating hidden distribution beneath apparent strength

Divergences are automatically drawn on the chart with visual lines and labels, providing early warning of potential trend reversals before price confirms.

Volatility Context

ATR-based volatility analysis adds critical context to all signals. When volatility exceeds predefined thresholds, the system flags elevated risk conditions where standard technical relationships may behave abnormally. This volatility layer helps distinguish between genuine structural breaks and noise-induced false signals.

Market State Classification

The combined output classifies markets into three operational states:

1. Trending State - KAMA direction confirmed by multiple timeframes and oscillator alignment

2. Sideways State - KAMA slope flattens, indicating range-bound conditions requiring different strategies

3. Transition State - Divergence warnings appear, signaling potential regime change

Intelligence Synthesis

Rather than presenting isolated signals, the system synthesizes information across four analytical dimensions: trend structure (KAMA), momentum convergence/divergence (oscillators), institutional volatility context (ATR), and temporal alignment (multi-timeframe). This multidimensional approach reduces the cognitive load on traders while increasing signal reliability through cross-verification.