CVD Candle Divergence Indicator

This indicator identifies potential reversal points by comparing the direction of price candles with the direction of cumulative volume delta (CVD) candles, while applying additional filters based on RSI behavior, volume strength, and candlestick wick structure.
It aims to highlight situations where price movement and volume delta disagree, which can signal fading momentum or absorption.

Core Concept
The script combines several independent conditions that must occur simultaneously before a signal is displayed on the chart. A signal appears only when all filters agree, reducing the number of low-quality or noise-based setups.
1. CVD Candle Direction
The indicator uses TradingView’s built-in function for volume delta candles. These candles summarize buying and selling aggression derived from lower-timeframe volume.

• A CVD green candle indicates more buyer-initiated volume.
  
• A CVD red candle indicates more seller-initiated volume.
  

The script looks for instances where price and CVD candles disagree:

• Bullish signal: price candle is green while CVD candle is red
  
• Bearish signal: price candle is red while CVD candle is green
  

This creates a form of divergence using volume delta instead of price highs and lows.

2. RSI Context Filter

Momentum is evaluated through RSI. Instead of relying only on standard overbought/oversold levels, the script also includes a recency filter based on the RSI midline (50 level).

RSI Threshold
Users can specify the RSI value required for bullish and bearish conditions.

Recency Filter
The indicator only allows signals if RSI has crossed the 50 level within a user-defined number of bars. This prevents signals during extended one-directional trends where divergence is less meaningful.

3. Volume Strength Filter
Signals are filtered through a volume-based requirement:
Current volume must exceed a moving average of volume multiplied by a user-defined factor.
This ensures that signals appear only during periods with sufficient participation and reduces noise during low-volume consolidation.

4. Wick-to-Body Ratio Filter
To incorporate price-action characteristics, the script evaluates the wick structure of each candle:

• Bullish signals require a sufficiently large lower wick relative to the total candle range.
  
• Bearish signals require a sufficiently large upper wick relative to the total candle range.
  

The wick percentage is fully configurable.
This adds a rejection or absorption component to the logic and prevents signals on weak or indecisive candles.

Signal Conditions
A bullish signal appears when all of the following are true:

• Price candle is green
  
• RSI is below the bullish threshold
  
• CVD candle is red
  
• Volume is above its threshold (if enabled)
  
• RSI has interacted with the 50 level recently
  
• Lower wick meets the wick-percentage requirement
  

A bearish signal requires the opposite conditions:

• Price candle is red
  
• RSI is above the bearish threshold
  
• CVD candle is green
  
• Volume is above its threshold (if enabled)
  
• RSI recently interacted with the 50 level
  
• Upper wick meets the wick-percentage requirement
  

Signals appear as arrows directly on the chart.
Use Cases

This indicator is intended for traders who work with:

• Momentum shifts
  
• Volume delta analysis
  
• Candle structure-based confirmation
  
• Reversal or exhaustion setups
  
• Divergence concepts beyond price highs/lows
  

It does not predict market direction. Instead, it highlights areas where multiple conditions suggest a potential imbalance between price movement and volume delta.

I would strongly suggest to use this indicator only on timeframes 2-15m.

Here are a few examples: