The DivergenceCCI function in ProBuilder language is designed to identify and return signals of bullish and bearish divergences between the Commodity Channel Index (CCI) and the price movements of a stock. Divergences are important as they can indicate potential reversals in the current price trend.

Syntax:

DivergenceCCI[CCIperiod, LowCCIthreshold, HighCCIthreshold, Bars]

• CCIperiod: The number of periods used for calculating the CCI. Default is 20.
• LowCCIthreshold: The lower threshold of the CCI, typically used to identify oversold conditions. Default is -100.
• HighCCIthreshold: The upper threshold of the CCI, typically used to identify overbought conditions. Default is 100.
• Bars: The number of bars to consider for detecting potential divergences. Default is 20.

Calculation and Interpretation:

The DivergenceCCI function detects:

• Bullish Divergence: Occurs when the price records new lows while the CCI begins to rise. This scenario suggests a weakening of the downward trend and a potential upward reversal. The function returns +1 in this case.
• Bearish Divergence: Occurs when the price records new highs while the CCI begins to fall. This indicates a weakening of the upward trend and a potential downward reversal. The function returns -1 in this case.
• If no divergence is detected, the function returns 0.

Example:

i = DivergenceCCI[20, -100, 100, 20]
return i style(histogram)

This example sets up the DivergenceCCI function with default parameters and applies it to a histogram style chart. It will help visualize the bullish and bearish divergence signals.

Tip: When analyzing divergences using both a price chart and a CCI chart, ensure that the CCI and DivergenceCCI parameters are synchronized for accurate comparison and analysis.