diff --git a/dashboard/api.py b/dashboard/api.py
index 97c3955..91a465a 100644
--- a/dashboard/api.py
+++ b/dashboard/api.py
@@ -35,6 +35,107 @@ GITEA_URL = os.environ.get('GITEA_URL', 'https://gitea.romfast.ro')
 GITEA_ORG = os.environ.get('GITEA_ORG', 'romfast')
 GITEA_TOKEN = os.environ.get('GITEA_TOKEN', '')
 
+
+def calculate_streak(completions, frequency):
+    """
+    Calculate the current streak for a habit based on completions array.
+    
+    Args:
+        completions: List of ISO timestamp strings representing completion dates
+        frequency: 'daily' or 'weekly'
+    
+    Returns:
+        int: The current streak count (days for daily, weeks for weekly)
+    
+    Rules:
+        - Counts consecutive periods from most recent completion backwards
+        - Daily: counts consecutive days without gaps
+        - Weekly: counts consecutive 7-day periods
+        - Returns 0 for no completions
+        - Returns 0 if streak is broken (gap detected)
+        - Today's completion counts even if previous days were missed
+    """
+    from datetime import datetime, timedelta
+    
+    # No completions = no streak
+    if not completions:
+        return 0
+    
+    # Parse all completion dates and sort descending (most recent first)
+    try:
+        completion_dates = []
+        for comp in completions:
+            dt = datetime.fromisoformat(comp.replace('Z', '+00:00'))
+            # Convert to date only (ignore time)
+            completion_dates.append(dt.date())
+        
+        completion_dates = sorted(set(completion_dates), reverse=True)
+    except (ValueError, AttributeError):
+        return 0
+    
+    if not completion_dates:
+        return 0
+    
+    # Get today's date
+    today = datetime.now().date()
+    
+    if frequency == 'daily':
+        # For daily habits, count consecutive days
+        streak = 0
+        expected_date = completion_dates[0]
+        
+        # If most recent completion is today or yesterday, start counting
+        if expected_date < today - timedelta(days=1):
+            # Streak is broken (last completion was more than 1 day ago)
+            return 0
+        
+        for completion in completion_dates:
+            if completion == expected_date:
+                streak += 1
+                expected_date -= timedelta(days=1)
+            elif completion < expected_date:
+                # Gap found, streak is broken
+                break
+        
+        return streak
+    
+    elif frequency == 'weekly':
+        # For weekly habits, count consecutive weeks (7-day periods)
+        streak = 0
+        
+        # Most recent completion
+        most_recent = completion_dates[0]
+        
+        # Check if most recent completion is within current week
+        days_since = (today - most_recent).days
+        if days_since > 6:
+            # Last completion was more than a week ago, streak is broken
+            return 0
+        
+        # Start counting from the week of the most recent completion
+        current_week_start = most_recent - timedelta(days=most_recent.weekday())
+        
+        for i in range(len(completion_dates)):
+            week_start = current_week_start - timedelta(days=i * 7)
+            week_end = week_start + timedelta(days=6)
+            
+            # Check if there's a completion in this week
+            has_completion = any(
+                week_start <= comp <= week_end
+                for comp in completion_dates
+            )
+            
+            if has_completion:
+                streak += 1
+            else:
+                # No completion in this week, streak is broken
+                break
+        
+        return streak
+    
+    return 0
+
+
 class TaskBoardHandler(SimpleHTTPRequestHandler):
     
     def do_POST(self):
diff --git a/dashboard/test_habits_streak.py b/dashboard/test_habits_streak.py
new file mode 100644
index 0000000..209009b
--- /dev/null
+++ b/dashboard/test_habits_streak.py
@@ -0,0 +1,179 @@
+#!/usr/bin/env python3
+"""
+Tests for streak calculation utility.
+Story 4.0: Backend API - Streak calculation utility
+"""
+
+import sys
+from pathlib import Path
+from datetime import datetime, timedelta
+
+# Add dashboard to path to import api module
+sys.path.insert(0, str(Path(__file__).parent))
+
+from api import calculate_streak
+
+
+def test_no_completions():
+    """Returns 0 for no completions"""
+    assert calculate_streak([], 'daily') == 0
+    assert calculate_streak([], 'weekly') == 0
+    print("✓ No completions returns 0")
+
+
+def test_daily_single_completion_today():
+    """Single completion today counts as streak of 1"""
+    today = datetime.now().isoformat()
+    assert calculate_streak([today], 'daily') == 1
+    print("✓ Daily: single completion today = streak 1")
+
+
+def test_daily_single_completion_yesterday():
+    """Single completion yesterday counts as streak of 1"""
+    yesterday = (datetime.now() - timedelta(days=1)).isoformat()
+    assert calculate_streak([yesterday], 'daily') == 1
+    print("✓ Daily: single completion yesterday = streak 1")
+
+
+def test_daily_consecutive_days():
+    """Multiple consecutive days count correctly"""
+    completions = [
+        (datetime.now() - timedelta(days=i)).isoformat()
+        for i in range(5)  # Today, yesterday, 2 days ago, 3 days ago, 4 days ago
+    ]
+    assert calculate_streak(completions, 'daily') == 5
+    print("✓ Daily: 5 consecutive days = streak 5")
+
+
+def test_daily_broken_streak():
+    """Gap in daily completions breaks streak"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        (today - timedelta(days=1)).isoformat(),
+        # Gap here (day 2 missing)
+        (today - timedelta(days=3)).isoformat(),
+        (today - timedelta(days=4)).isoformat(),
+    ]
+    # Should count only today and yesterday before the gap
+    assert calculate_streak(completions, 'daily') == 2
+    print("✓ Daily: gap breaks streak (counts only before gap)")
+
+
+def test_daily_old_completion():
+    """Completion more than 1 day ago returns 0"""
+    two_days_ago = (datetime.now() - timedelta(days=2)).isoformat()
+    assert calculate_streak([two_days_ago], 'daily') == 0
+    print("✓ Daily: completion >1 day ago = streak 0")
+
+
+def test_weekly_single_completion_this_week():
+    """Single completion this week counts as streak of 1"""
+    today = datetime.now().isoformat()
+    assert calculate_streak([today], 'weekly') == 1
+    print("✓ Weekly: single completion this week = streak 1")
+
+
+def test_weekly_consecutive_weeks():
+    """Multiple consecutive weeks count correctly"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        (today - timedelta(days=7)).isoformat(),
+        (today - timedelta(days=14)).isoformat(),
+        (today - timedelta(days=21)).isoformat(),
+    ]
+    assert calculate_streak(completions, 'weekly') == 4
+    print("✓ Weekly: 4 consecutive weeks = streak 4")
+
+
+def test_weekly_broken_streak():
+    """Missing week breaks streak"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        (today - timedelta(days=7)).isoformat(),
+        # Gap here (week 2 missing)
+        (today - timedelta(days=21)).isoformat(),
+    ]
+    # Should count only current week and last week before the gap
+    assert calculate_streak(completions, 'weekly') == 2
+    print("✓ Weekly: missing week breaks streak")
+
+
+def test_weekly_old_completion():
+    """Completion more than 7 days ago returns 0"""
+    eight_days_ago = (datetime.now() - timedelta(days=8)).isoformat()
+    assert calculate_streak([eight_days_ago], 'weekly') == 0
+    print("✓ Weekly: completion >7 days ago = streak 0")
+
+
+def test_multiple_completions_same_day():
+    """Multiple completions on same day count as one"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        (today - timedelta(hours=2)).isoformat(),  # Same day, different time
+        (today - timedelta(days=1)).isoformat(),
+    ]
+    assert calculate_streak(completions, 'daily') == 2
+    print("✓ Daily: multiple completions same day = 1 day")
+
+
+def test_todays_completion_counts():
+    """Today's completion counts even if yesterday was missed"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        # Yesterday missing
+        (today - timedelta(days=2)).isoformat(),
+    ]
+    # Should count only today (yesterday breaks the streak to previous days)
+    assert calculate_streak(completions, 'daily') == 1
+    print("✓ Daily: today counts even if yesterday missed")
+
+
+def test_invalid_date_format():
+    """Invalid date format returns 0"""
+    assert calculate_streak(['not-a-date'], 'daily') == 0
+    assert calculate_streak(['2026-13-45'], 'daily') == 0
+    print("✓ Invalid date format returns 0")
+
+
+def test_weekly_multiple_in_same_week():
+    """Multiple completions in same week count as one week"""
+    today = datetime.now()
+    completions = [
+        today.isoformat(),
+        (today - timedelta(days=2)).isoformat(),  # Same week
+        (today - timedelta(days=4)).isoformat(),  # Same week
+        (today - timedelta(days=7)).isoformat(),  # Previous week
+    ]
+    assert calculate_streak(completions, 'weekly') == 2
+    print("✓ Weekly: multiple in same week = 1 week")
+
+
+def run_all_tests():
+    """Run all streak calculation tests"""
+    print("\n=== Testing Streak Calculation ===\n")
+    
+    test_no_completions()
+    test_daily_single_completion_today()
+    test_daily_single_completion_yesterday()
+    test_daily_consecutive_days()
+    test_daily_broken_streak()
+    test_daily_old_completion()
+    test_weekly_single_completion_this_week()
+    test_weekly_consecutive_weeks()
+    test_weekly_broken_streak()
+    test_weekly_old_completion()
+    test_multiple_completions_same_day()
+    test_todays_completion_counts()
+    test_invalid_date_format()
+    test_weekly_multiple_in_same_week()
+    
+    print("\n✓ All streak calculation tests passed!\n")
+
+
+if __name__ == '__main__':
+    run_all_tests()