"Classic" Divergence is specified as:
- A higher price, with reduced high --> Potential Sell Point
- A lower price, with higher low --> Potential Buy Point
"Alternative" Divergence is specified as:
- A higher high, with reduced price --> Potential Sell Point
- A lower low, with higher price --> Potential Buy Point
Divergence should be used in combination with other indicators. This indicator identifies local tops and bottoms, with potential for macro trend shifts.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.