Golden Ratio Trend Persistence [EWT]

Golden Ratio Trend Persistence [EWT]

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Overview
The Golden Ratio Trend Persistence [EWT] is a dynamic tool designed to identify the strength and persistence of market trends. It operates on a simple yet powerful premise: a trend is likely to continue as long as it doesn't retrace beyond the key Fibonacci golden ratio of 61.8%.

This indicator automatically identifies the most significant swing high or low and plots a single, dynamic line representing the 61.8% retracement level of the current move. This line acts as a "line in the sand" for the prevailing trend. The background color also changes to provide an immediate visual cue of the current market direction.

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The Power of the Golden Ratio (61.8%)
The golden ratio (ϕ≈1.618) and its inverse (0.618, or 61.8%) are fundamental mathematical constants that appear throughout nature, art, and science, often representing harmony and structure. In financial markets, this ratio is a cornerstone of Fibonacci analysis and is considered one of the most critical levels for price retracements.

Market movements are not linear; they progress in waves of impulse and correction. The 61.8% level often acts as the ultimate point of support or resistance. A trend that can hold this level demonstrates underlying strength and is likely to persist. A breach of this level, however, suggests a fundamental shift in market sentiment and a potential reversal.

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How to Use This Indicator
This indicator is designed for clarity and ease of use.

Identifying the Trend: The visual cues make the current trend instantly recognizable.

A teal line with a teal background signifies a bullish trend. The line acts as dynamic support.

A maroon line with a maroon background signifies a bearish trend. The line acts as dynamic resistance.

Confirming Trend Persistence: As long as the price respects the plotted level, the trend is considered intact.

In an uptrend, prices should remain above the teal line. The indicator will automatically adjust its anchor to new, higher lows, causing the support line to trail the price.

In a downtrend, prices should remain below the maroon line.

Spotting Trend Reversals: The primary signal is a trend reversal, which occurs when the price closes decisively beyond the plotted level.

Potential Sell Signal: When the price closes below the teal support line, it indicates that buying pressure has failed, and the uptrend is likely over.

Potential Buy Signal: When the price closes above the maroon resistance line, it indicates that selling pressure has subsided, and a new uptrend may be starting.

Think of this tool as an intelligent, adaptive trailing stop that is based on market structure and the time-tested principles of Fibonacci analysis.

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Input Parameters
You can customize the indicator's sensitivity through the following inputs in the settings menu:

Pivot Lookback Left: This number defines how many bars to the left of a candle must be lower (for a pivot high) or higher (for a pivot low) to identify a potential swing point. A higher value will result in fewer, but more significant, pivots being detected.

Pivot Lookback Right: This defines the number of bars that must close to the right before a swing point is confirmed. This parameter prevents the indicator from repainting. A higher value increases confirmation strength but also adds a slight lag.

Fibonacci Ratio: While the default is the golden ratio (0.618), you can adjust this to other key Fibonacci levels, such as 0.5 (50%) or 0.382 (38.2%), to test for different levels of trend persistence.

Adjusting these parameters allows you to fine-tune the indicator for different assets, timeframes, and trading styles, from short-term scalping to long-term trend following.