Trend Correlation Strength (TCS) Indicator
Introducing the Trend Correlation Strength (TCS) Indicator
A new forex indicator called the Trend Correlation Strength (TCS), designed to measure trend strength in a unique and effective way, surpassing traditional indicators like the Average Directional Index (ADX). Unlike the ADX, which relies on directional movement (+DI and -DI), the TCS uses a fresh approach by calculating the correlation between closing prices and a linear time series, offering forex traders a distinctive tool for identifying strong trends.
Why You Need TrendCorrelationStrength
Imagine a forex market where trends sneak up like whispers before roaring into multi-month moves—hundreds of pips just waiting to be captured. You’ve got your indicator toolkit, but something’s been missing: a way to pinpoint strong trends with precision, cutting through the noise of weekly volatility. Enter TrendCorrelationStrength (TCS)—your secret weapon, built from the ground up to outshine the old guard like ADX.
Why It’s a Must-Have
Catches Trends Like a Pro:
TCS doesn’t mess around with lagging directional averages—it measures how linearly prices move over time, spotting trends as they build. Think of it as a trend radar: when TCS climbs above 45 on your weekly chart, it’s screaming, “This move’s got legs!” Pair it with a few decent indicators, and you’re in early—grabbing pips while others are still guessing.
Simple, Clever, Yours:
“simple and clever”—TCS delivers. One blue line, no clutter, with a dotted 45-level guide baked in. It’s your strength signal, your volume proxy, all in a clean package—perfect for your algo’s elegance. No +DI/-DI nonsense—just pure trend power.
Forex-Tuned Edge:
Unlike ADX, born for 1970s commodities, TCS is forged for forex’s macro-driven world. Those 13 weeks? That’s a quarter—think GDP releases, rate hikes—tailored to the rhythms you trade. It’s not a relic; it’s your modern advantage.
Why TCS Stands Out
Unique Calculation: It measures how linearly prices move over time, a perspective not captured by the ADX or other common indicators.
Trend Strength Focus: Like the ADX, it quantifies trend strength on a 0–100 scale, but it does so through price-time correlation.
Responsiveness: Detects trends quickly in linearly trending markets, potentially giving traders an edge.
Simplicity: A single, easy-to-read line makes it accessible for traders of all levels.
How TCS Works
The TCS indicator calculates trend strength in two steps: computing a raw trend strength value based on correlation, then smoothing it to reduce noise.
Step 1: Correlation Calculation
What It Measures: For each bar, TCS calculates the Pearson correlation coefficient (( r )) between the closing prices of the last ( M ) periods and a linear time series (e.g., 1, 2, 3, ..., ( M )).
Scaling: The absolute value of ( r ) (ranging from 0 to 1) is multiplied by 100 to produce a raw TCS value between 0 and 100. The absolute value ensures the indicator reflects trend strength regardless of direction (up or down).
Step 2: Smoothing
Method: The raw TCS is smoothed using Wilder’s smoothing technique, similar to the ADX, to make it less sensitive to minor price fluctuations.
Strong Trends: In a steady uptrend (e.g., prices rising from 100 to 114 over 14 periods), the correlation approaches 1, yielding a raw TCS near 100. Similarly, a downtrend produces a high TCS due to the absolute value.
Ranging Markets: In choppy conditions (e.g., prices oscillating between 100 and 101), the correlation nears 0, resulting in a low TCS.
Smoothing Effect: The smoothed TCS provides a stable signal, helping traders avoid false positives in volatile markets.
Advantages Over Existing Indicators
Novel Insight: By focusing on price-time linearity, TCS captures trends differently from momentum-based (e.g., RSI) or direction-based (e.g., ADX) indicators.
Potential Edge: It may detect linear trends earlier or more reliably than the ADX in certain market conditions.
Complementary Use: Since TCS is directionless (like the ADX), it pairs well with directional tools like moving averages or Ichimoku Cloud.
Limitations
Linear Assumption: TCS excels with linear trends but may underperform with parabolic or erratic price movements.
No Direction: It indicates strength, not direction, requiring additional indicators for trade decisions.
