Pearson's R Trend

18. Nov. 2024

Pearson's R Trend Indicator

Overview
The Pearson's R Trend Indicator is an advanced technical analysis tool that measures the strength and direction of price trends using statistical correlation. By comparing fast and slow-period Pearson correlation coefficients, this indicator helps identify trend momentum, potential reversals, and overbought/oversold conditions.

Key Features

• Dual timeframe correlation analysis (Fast and Slow periods)
  
• Signal line with crossover alerts
  
• Dynamic histogram for trend visualization
  
• Configurable overbought/oversold levels
  
• Multiple visual components with customizable colors
  
• Comprehensive alert system
  

Technical Details

Core Calculations

• Fast R: Calculates Pearson's correlation coefficient over the faster period (default: 21 periods)
  
• Slow R: Calculates Pearson's correlation coefficient over the slower period (default: 34 periods)
  
• R-Diff: Normalized difference between Fast and Slow R values (range: -1 to 1)
  
• Signal Line: Smoothed average of R-Diff (default: 3-period SMA)
  
• Histogram: Difference between R-Diff and Signal Line
  

Signal Generation

1. Zero Line Crosses
   • Bullish: R-Diff crosses above zero
   • Bearish: R-Diff crosses below zero
   
   
2. Signal Line Crosses
   • Bullish: R-Diff crosses above Signal Line
   • Bearish: R-Diff crosses below Signal Line
   
   
3. Overbought/Oversold Conditions
   • Overbought: R-Diff above 0.45 (default)
   • Oversold: R-Diff below -0.45 (default)
   

Customization Options

Calculation Settings

• Fast Length: Period for fast correlation calculation (default: 21)
  
• Slow Length: Period for slow correlation calculation (default: 34)
  
• Signal Smoothing: Moving average period for signal line (default: 3)
  
• Price Source: Configurable input source (default: close)
  

Visual Settings

• Histogram display toggle
  
• Signal line display toggle
  
• Crossing markers toggle
  
• Line width adjustments
  
• Custom color schemes for bullish/bearish signals
  
• Configurable overbought/oversold levels
  

Interpretation

Bullish Signals

• R-Diff crossing above zero
  
• R-Diff crossing above signal line
  
• R-Diff emerging from oversold territory
  
• Positive histogram expansion
  

Bearish Signals

• R-Diff crossing below zero
  
• R-Diff crossing below signal line
  
• R-Diff dropping from overbought territory
  
• Negative histogram expansion
  

Alert Conditions

• Zero line crosses (both directions)
  
• Signal line crosses (both directions)
  
• Overbought zone entry
  
• Oversold zone entry
  

Best Practices

1. Use multiple timeframe analysis for confirmation
   
2. Combine with volume and price action analysis
   
3. Watch for divergences between R-Diff and price
   
4. Pay attention to histogram momentum changes
   
5. Use overbought/oversold levels as dynamic support/resistance zones
   

Notes

• The indicator uses statistical correlation to measure trend strength
  
• Normalized calculations ensure consistent -1 to 1 range
  
• Built-in alert system for all major signal types
  
• Customizable visual elements for optimal chart analysis
  

Disclaimer
This technical indicator is designed to supplement your trading analysis and should not be used as the sole decision-making tool. Always combine with other forms of analysis and proper risk management techniques.

11. Dez. 2024

Versionshinweise

Removed directional arrows on chart
Displays background color when we have a cross outside the OB/OS conditions