The Tango convergence indicator analyzes the relationship between the RSI (Relative Strength Index) and the closing price of a financial asset. Unlike ASC_Trend, Tango operates by identifying divergences or convergences between the RSI and the closing price, without relying on similar principles.
Here's how the Tango convergence indicator functions:
Identifying Divergence or Convergence: Initially, it scans for any divergence or convergence between the RSI and the closing price.
Finding Extremes: Once a divergence or convergence is detected, Tango identifies the maximum (MAX) and minimum (MIN) RSI values up to that point.
Determining Arrow Direction: If the current RSI value is equal to or greater than a certain threshold above the minimum (MIN) RSI value, an upward arrow is indicated. Conversely, if the RSI value is equal to or lower than a certain threshold below the maximum (MAX) RSI value, a downward arrow is displayed.
Empty Square: If the current RSI value falls between the thresholds calculated based on the maximum and minimum RSI values, an empty square is drawn to signify this neutral state.
In
simpler terms, Tango looks for instances where the RSI and closing
price move in different directions. It then calculates thresholds
based on the range between the maximum and minimum RSI values.
Depending on where the current RSI value lies relative to these
thresholds, it indicates whether the trend is bullish (upward arrow),
bearish (downward arrow), or neutral (empty square).
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