Magnetick Extension [MagnetickAI]

Magnetick Extension measures how far price has stretched from its key moving averages, expressed in ATR units. A stock that's 7× ATR above its 50 EMA is statistically more likely to snap back than one that's 2× away — this indicator makes that distance visible at a glance.


THE CONCEPT

Price oscillates around moving averages. During strong trends it pulls away, and the further it stretches, the higher the probability of a mean reversion. This indicator quantifies that stretch using ATR as the ruler, so "5× from the 50 EMA" means the same thing whether you're looking at a $20 stock or a $500 one.

The ATR calculation uses a long lookback (50 periods by default) to avoid a common trap: near the end of a parabolic move, recent candles are large, which inflates a standard 14-period ATR and makes the stock appear less extended than it actually is. A 50-period ATR represents the stock's normal volatility, giving an honest read on how far price has actually traveled.


THE 3 LINES

1. Slow EMA Distance (thick, heat-colored) — The primary line. Changes color as extension increases: gray in normal territory, yellow at caution, soft red at profit-take, bright red at extreme. This EMA has the most research behind its thresholds.

2. Medium EMA Distance (purple) — Intermediate extension. Useful for swing traders or for confirming whether the trend is accelerating or fading relative to the slow line.

3. Fast EMA Distance (blue) — Short-term extension. Normally stays near zero; when it spikes, short-term momentum is intense. When it drops back toward zero while the slow line stays elevated, the pullback may be starting.


ZONE THRESHOLDS

Each EMA has its own configurable thresholds. Defaults for the slow EMA (50):

Normal (below 4×): Healthy trend. Fine to hold or initiate positions.

Caution (4×): No new entries zone. The risk/reward for fresh positions deteriorates above 4× ATR from the slow EMA.

Profit-Take (7×): Begin scaling out partials. Empirically, 7× is where small and mid-cap momentum names start to stall. Large caps and indexes tend to mean-revert earlier (3-5×).

Extreme (10×): Historical reversal zone. Multiple high-profile momentum stocks (PLTR, TSLA, NVDA, SOFI, VRT) have experienced stalls and reversals near this level.

Defaults by EMA:
Slow (50): 4 / 7 / 10
Medium (21): 2 / 4 / 6
Fast (9): 1 / 2 / 3

Signs matter: +7.2× means price is 7.2 ATR above the EMA. -5.1× means 5.1 ATR below. Zones are based on absolute distance — overextension applies in both directions.


HOW TO USE IT

Think of the slow EMA line as a speedometer for trend extension. The practical workflow:

- Below 4× (slow EMA): business as usual — hold or add
- 4× to 7×: tighten stops, no new entries
- Above 7×: start scaling out (1/3 of position)
- Above 10×: take another 1/3 off, expect a pullback

The fast and medium lines add context. If the slow line shows 6× but the fast line is back near zero, short-term momentum has already faded — the pullback may be underway. If all three lines are elevated, the trend is still accelerating.

Adjust thresholds by market cap:
- Large caps / indexes: lower thresholds (3 / 5 / 7 for the slow EMA)
- Small/mid-cap momentum: defaults work well (4 / 7 / 10)
- Low-float runners: may need higher thresholds (5 / 10 / 15)


DASHBOARD TABLE

A compact table (top-right) shows each EMA's current price, ATR distance, and zone classification. Distance and zone text are color-coded: green for normal, yellow for caution, soft red for profit-take, bright red for extreme. The footer shows the ATR value and calculation timeframe.


CALCULATION TIMEFRAME

By default, EMAs and ATR are calculated on the daily timeframe regardless of your chart timeframe. On a 1-minute chart, you see how far the current price is from the daily 50 EMA in daily ATR units — exactly the context a day trader needs. The reference values update once per day (stable anchor), while the distance updates in real-time as price moves.

Set the calculation timeframe to blank for chart-timeframe calculations if you prefer intraday EMAs on intraday charts.


SETTINGS

- EMA lengths: 9, 21, 50 (all configurable)
- ATR length: 50 (configurable, longer = more stable)
- Calculation timeframe: daily by default, blank for chart timeframe
- Zone thresholds: three levels per EMA (Caution, Profit-Take, Extreme)
- Toggle each EMA line independently
- Toggle area fill, zone backgrounds, and dashboard table


ALERTS

- Slow EMA reaches Profit-Take zone
- Slow EMA reaches Extreme zone
- Medium EMA reaches Extreme zone
- Fast EMA reaches Extreme zone
- Any EMA reaches Extreme zone (composite)
- Slow EMA returns to Normal zone


LIMITATIONS

- Thresholds are heuristics, not physics. 10× is where many stocks have reversed, but some push to 15× or higher before correcting.
- The indicator shows extension, not timing. A stock at 8× can stay at 8× for days before pulling back.
- Default thresholds are calibrated for daily charts on U.S. equities. Crypto, forex, and intraday-only setups may need different values.
- On intraday charts with daily calculation timeframe, the EMA and ATR values use the prior day's confirmed close. They don't update intraday.
- Zone reference lines and fills are shown on the positive (bullish) side only. Bearish overextension is visible via the area fill turning red below zero and the table's zone classification.
- The thresholds are informed by the ATR% Multiple framework and empirical observation across momentum stocks, but originate from a specific research dataset — not a universal backtest.


Built by MagnetickAI — open source indicator suite for intraday traders.