Vdubus MacD Divergence Trend Break Signal Generator

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Vdubus Divergence Wave Theory v1
System Type: Momentum Trendline Breakout & Continuation Model Platform:


1. Executive Summary
The Vdubus Divergence Wave Theory v1 is a sophisticated trend-following and reversal strategy developed over a 10-year period. Unlike standard indicators that rely on simple crossovers, this system applies Price Action geometry (Trendlines) directly to Momentum (MACD).

PREVIOUS DIVERGENCE PROJECTS FUTURE TREND BREAKS/ REVERSALS !

The core philosophy is that momentum breaks trendlines before price does. By identifying compression in the MACD oscillator and trading the breakout of that compression, the system identifies high-probability entries for both Reversals and Trend Continuations.

2. Core Logic & Methodology
The indicator operates on three specific layers of logic:

A. The Engine (Modified MACD)
It utilizes a custom-tuned MACD (Moving Average Convergence Divergence) to smooth out noise while retaining responsiveness.

Fast Length: 12

Slow Length: 34 (Smoother than the standard 26)

Signal Smoothing: 5

B. Dynamic Trendline Projection (The "Divergence" Aspect)
The script uses a Pivot-based algorithm to mathematically identify peaks and troughs in momentum.

Resistance Projection: It identifies lower highs in the MACD (momentum is fading) and projects a red resistance line forward.

Support Projection: It identifies higher lows in the MACD (momentum is building) and projects a blue support line forward.

The Trigger: A signal is generated only when the MACD line physically crosses these invisible projected barriers.

C. The Wave Theory (Signal Classification)
The system distinguishes between "Reversals" and "Continuations" based on the Zero Line.

Below Zero: Considered "Bearish Territory." A break upward here is a Reversal.

Above Zero: Considered "Bullish Territory." A break upward here is Momentum Continuation (Overbought).

3. Signal Types & Visual Guide
The indicator outputs four distinct signals, color-coded for instant decision-making.

🟢 1. LONG (Standard Reversal)
Condition: MACD breaks a Resistance Trendline while Below Zero.

Meaning: Momentum has finished causing the price to drop and is reversing upward. This is often a "Buy the Bottom" signal.

Visuals: Green Box, Green "LONG" Label.

🔵 2. OB-CONT (Overbought Continuation)
Condition: MACD breaks a Resistance Trendline while Above Zero.

Meaning: The trend is already bullish, but momentum consolidated briefly before exploding higher. This indicates a "Second Wave" or trend continuation.

Visuals: Blue Box (Thick Border), Bright Blue "OB-CONT" Label.

🔴 3. SHORT (Standard Reversal)
Condition: MACD breaks a Support Trendline while Above Zero.

Meaning: Momentum has exhausted to the upside and is rolling over. This is often a "Sell the Top" signal.

Visuals: Red Box, Red "SHORT" Label.

🟠 4. OS-CONT (Oversold Continuation)
Condition: MACD breaks a Support Trendline while Below Zero.

Meaning: The trend is already bearish, but price paused briefly before dropping further. This indicates a "Waterfall" or trend continuation downward.

Visuals: Orange Box (Thick Border), Bright Orange "OS-CONT" Label.

4. Technical Settings (Inputs)
Users can adjust the sensitivity of the "Wave" detection:

Pivot Lookback Left (Default: 20): How many bars to the left the script checks to confirm a major peak/valley. Higher numbers = fewer, more significant signals. Lower numbers = more signals, potentially more noise.

Pivot Lookback Right (Default: 20): The confirmation period. A value of 20 ensures that the pivot used for the trendline is a significant structural point, not just a small blip.

5. Best Practices for Trading
The Box Break: The coloured box drawn around the signal represents the "Breakout Candle." A strong close outside this box often confirms the move.

Zero Line Authority: Pay attention to where the cross happens.

Crosses occurring near the Zero Line are often the most explosive, as they represent a full momentum shift.

Deep Continuation Signals (e.g., an OB-CONT very high up) should be treated with caution as the move might be exhausted.

Divergence Context: This tool is designed to visualize the breaking of divergence. When you see a Price making higher highs but the MACD making lower highs (Divergence), wait for the Red Line Break (Short Signal) to confirm the trade.

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🚀 Vdubus Divergence Wave Theory v2 [Dual Fractal]
New Features:

Dual Logic Engine: It now runs two separate detection algorithms on the same MACD.

Macro (Trend): Default Lookback 89 (The "Long Game").

Micro (Scalp): Default Lookback 14 (The "Short Game").

Smart Label Management: I added your requested "Historical Label" toggle.

Boxes: Always remain visible on history (so you can backtest).

Labels: You can now check/uncheck "Show Historical Labels". If unchecked, it cleans up the chart, showing text only for the most recent active signal, while keeping the historical boxes for reference.