Trend Exhaustion Meter

# Trend Exhaustion Meter - Composite exhaustion score

*Category: Trend | Difficulty: advanced | Window: separate window below the chart | Markets: Universal (Forex, indices, commodities, crypto, stocks) | Suggested timeframes: M30, H1, H4, D1*

## Short description

> A 0 to 100 score combining stretch from the mean, directional saturation and momentum fade. It measures the continuation risk of a move, not its reversal.

### Overview

No single symptom says a trend is about to end, but when several appear together the risk to reward ratio of a continuation entry deteriorates noticeably. Trend Exhaustion Meter combines three measures that in practice accompany the end of directional moves. The first is stretch: how far price has separated from its own average, measured in ATR. The second is saturation: what share of recent bars closed in the trend direction, because when nearly all of them did, few participants remain to convert. The third is momentum fade: current momentum compared with the maximum momentum reached within the same window. The three components are normalised between zero and one and averaged, and the result takes the sign of the trend direction.

### How the calculation works

1. The reference direction is the sign of the deviation between price and the simple average of the window: this is the trend whose exhaustion we measure.

2. Stretch component: absolute deviation divided by InpStretchAtr times the ATR, clamped to one.

3. Saturation component: share of window bars closed in the trend direction, rescaled from the neutral fifty per cent up to one hundred per cent.

4. Momentum fade component: one minus the ratio between current momentum and the maximum trend-favourable momentum within the window.

5. The three components are averaged and rescaled to percentage; the sign shows whether the exhausting trend is bullish or bearish.

6. The histogram is coloured only beyond the InpAlertLevel threshold, so attention focuses on genuinely relevant situations.

### How to use it

- Use it as a brake, not as a contrarian signal: beyond the threshold stop adding to the position and tighten management, do not reverse.

- A high value persisting for a long time describes a powerful trend, not a finished one: it is in the strongest trends that the three components stay saturated.

- The most meaningful moment is the drop back below the threshold after a prolonged period above it: that is where the move has actually lost its drive.

- Pair it with a structure indicator for confirmation: exhaustion becomes actionable only when highs and lows also stop progressing.

- For counter-trend traders it works as an admission filter: without high exhaustion, a contrarian entry is merely a bet.

### Who it is for and on which timeframes

It is a tool for experienced traders managing open positions who must decide when to stop adding risk. It is not for those seeking entry arrows, because its correct use is defensive. It works from M30 to D1; below M30 the three components become noisy and the score jumps uninformatively. It demands interpretive discipline: the temptation to read it as a reversal signal is strong, but that is precisely the mistake the indicator is designed to prevent.

### Practical example of reading a signal

On USDCAD H4 price has been falling for two weeks. The meter reaches -82: price sits almost three ATR below the average, eighty per cent of the last thirty bars closed lower and current momentum is half the maximum. A short position is not reversed, but the stop moves just above the high of the last five bars and pyramiding stops. Price falls for another six bars, then bounces: the stop is hit in profit. The value returns below the threshold at -55, and only there could a counter-trend entry be considered, and only with confirmation of a higher structural high.

## Input parameters

| Parameter | Default | Description |

|---|---|---|

| `InpWindow` | 30 | Window over which average, saturation and maximum momentum are measured. It defines which scale of move is being assessed. |

| `InpMomentum` | 10 | Horizon of the internal momentum. It must stay clearly below InpWindow for the comparison with the maximum to be meaningful. |

| `InpAtrPeriod` | 30 | ATR period used to normalise the stretch. |

| `InpStretchAtr` | 3.00 | Distance from the average, in ATR, treated as maximum stretch. Lowering it saturates the component sooner and makes the score more sensitive. |

| `InpAlertLevel` | 70.0 | Threshold beyond which the histogram is coloured. Raising it flags only the most extreme situations. |

## Advantages / strengths

- It combines three mutually independent symptoms, reducing the weight of any single anomalous price behaviour.

- All components are normalised, so the score means the same thing on any instrument and timeframe.

- Its intended use is defensive, which makes it complementary rather than competing with the entry indicators already in use.

- No repaint and no hidden optimisation parameters: the three components carry equal weight by explicit design.

## Limitations and warnings

- A high value can persist for dozens of bars in a strong trend: reading it as an imminent reversal is the most common and most expensive mistake.

- The three components are averaged with equal weight, a reasonable but arbitrary choice: on some markets one of them is more informative than the others.

- It requires a wide history window and three mutually coordinated parameters: it is not a tool to apply without reading the documentation.

- In sideways phases the reference direction keeps flipping and the score swings between positive and negative with no operational meaning.

**No repaint:** values printed on a closed bar are never modified afterwards.

**Disclaimer.** This product is a technical analysis tool, not an automated trading system, and it offers no profit guarantee whatsoever. Financial markets carry the risk of total loss of the invested capital. Past performance is not indicative of future results. Every signal must be confirmed with your own analysis, a money management plan and prior testing on a demo account. The author is not responsible for trading decisions taken on the basis of this indicator.

## Suggested tags / keywords for MQL5

`exhaustion`, `trend`, `overextension`, `momentum`, `risk management`, `composite`, `no repaint`, `counter trend`