Volume Divergence Reversal Signals [AlgoAlpha]

🟠OVERVIEW
This script identifies potential trend reversals by analyzing divergences between price action and normalized volume. It transforms raw volume into a 0–100 scale to make activity levels comparable across different market regimes. By detecting instances where price reaches new extremes but volume fails to follow, the script highlights "exhaustion" or "effort without result" scenarios. It also integrates Volume Delta data to provide granular details on net buying or selling pressure at the exact moment a divergence is confirmed, offering a deeper look into the internal mechanics of a reversal.

🟠CONCEPTS
The core logic relies on the relationship between price discovery and participation. First, volume is normalized against a long-term lookback to create a standardized baseline. The script then monitors "pivots" in this normalized volume. A Bullish Divergence occurs when price makes a Lower Low while volume creates a Higher Low, suggesting that selling pressure is drying up despite the price drop. A Bearish Divergence occurs when price makes a Higher High while volume makes a Lower High, indicating a lack of buying conviction at new peaks. While price defines the trend structure, the volume pivots provide the momentum context required to signal a change in direction.

🟠FEATURES

• Automatic detection of bullish and bearish volume divergences.
  
• Integrated Volume Delta (CVD or per-bar) displayed directly on signal labels.
  
• Real-time alerts for confirmed divergence patterns.
  

🟠USAGE

1. Setup: Add the script to your chart and ensure the Normalization Length is large enough (default 1000) to capture a representative sample of volume. For higher precision, the Volume Delta Lower Timeframe should be set to a lower interval than your current chart.
2. Read the chart: Look for the "▲" (Bullish) and "▼" (Bearish) labels. When a signal appears, check the label text; it shows the total volume and the net delta (buy vs. sell) for that specific pivot. A bullish divergence with a positive (+) delta suggests aggressive buyers are stepping in at the low.
3. Settings that matter: The Pivot Lookback Right determines the confirmation delay; a higher value makes signals more reliable but "lags" the entry. The Max Bars Between Pivots controls how far apart the two price/volume points can be; decreasing this focuses the script on immediate, sharp reversals rather than broad cycles.