Correlation Trend Indicator

What is the Correlation Trend Indicator?

The Correlation Trend Indicator (CTI) is John Ehlers' answer to a deceptively simple question: how much does recent price look like a straight line? Introduced in 2020, it computes the Pearson correlation between price and an ideal rising line over a lookback window. The output lives between -1 and +1: readings near +1 mean price has tracked a steadily rising line, readings near -1 mean a steadily falling one, and readings near zero mean the window contains no linear drift worth the name.

The elegance is that trend is defined by fit rather than by displacement. A market can be far above an old level yet trending badly (one gap followed by chop scores poorly), while a modest but relentless grind scores near the extremes. Because correlation is scale-free, thresholds transfer across instruments and timeframes far better than slope-based measures, whose units depend on price level and volatility.

CTI is closely related to the R-squared trend fit: squaring CTI gives the R-squared of the same linear regression, discarding the sign. Traders use CTI when they want strength and direction in one bounded number, and R-squared when direction is handled elsewhere. Like every windowed statistic, it is entirely backward-looking: a perfect +1 describes the last n bars, not the next n.

How it's calculated

CTI is the Pearson correlation between the source series and a straight rising line (the bar index) over the lookback:

Orient the index so that a rising market yields positive CTI; implementations differ on whether they correlate against i or -i and flip the sign accordingly.

The result is identical to the signed square root of the regression R-squared over the same window.

How traders use it

• As a regime gate: only take trend-following entries when CTI is above a positive threshold (commonly around +0.5) or below the negative mirror, and stand down or switch to mean-reversion logic near zero.
• As a direction-plus-quality score in one number, replacing the two-step check of an average's slope plus a separate strength measure such as the ADX/DMI system.
• Zero-line crossings are sometimes traded as trend-change signals; these lag the actual turn by a meaningful fraction of the window, so they suit confirmation rather than timing.
• Its limitations are structural: a single large gap inside the window distorts the correlation, V-shaped reversals pass through zero late, and the reading says nothing about the magnitude of the drift, only its consistency.

CTI vs other trend-strength measures