Correlation Trend Indicator

Correlation Trend Indicator scores how closely the recent window of price resembles a straight line, implementing the Correlation Trend Indicator exactly as defined: a Pearson correlation computed over 20 bars between the source and an ideal rising line. Readings near +1 mean the window tracked a steady advance, readings near -1 a steady decline, and the plot flips color at zero with a gradient fill toward the reading. Dashed thresholds at plus and minus 0.5 and dotted bounds at plus and minus 1 frame the scale.

How to Trade the Correlation Trend Indicator?

• Above the Trend Threshold (+0.5): a bullish trend regime — the background tints, marking stretches where trend-following logic applies.
• Below -0.5: the bearish mirror; regime alerts fire on entry to either state.
• Inside the threshold band: a trendless window — the regime background clears and a dedicated alert marks the return to neutral.
• Zero crosses: sign changes arrive after the turn, lagging by a fraction of the window; optional circles mark them on the zero line.

As a bounded, scale-free regime gauge it slots cleanly into the trend family.

Correlation Trend Indicator Settings

• Length (default 20): lookback correlated against the ideal rising line; it sets the trend scale being measured; other lengths score other swings and need not agree.
• Source (default close): the series being scored.
• Trend Threshold (default 0.5): magnitude treated as a meaningful trend; the regime states and their alerts key off it.
• Regime Background (default enabled): tints the pane while the reading holds beyond the threshold.
• Zero Cross Markers (default disabled): circles at sign changes; the cross alerts fire either way.

Frequently Asked Questions

CTI or the R-squared trend fit?

Squaring CTI yields the R-squared of the same regression while discarding the sign — so R-Squared Trend Fit measures strength alone, and CTI folds strength and direction into a single bounded reading. Choose CTI when a single pane must answer both questions.

What lookback should I use?

The window defines the swing being scored, and half the period of interest is a common convention. No single value is right everywhere: a 20-bar and a 100-bar CTI can disagree legitimately because they describe different trends on the same chart.

Does a reading near +1 predict continuation?

No — like every windowed statistic it is entirely backward-looking, describing the last 20 bars rather than the next 20. Its job is honest regime classification: saying when a trend-following playbook applies, not forecasting where price goes.