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Linear Regression Slope Forex Technical Analysis and Linear Regression Slope Forex Trading Signals

The Linear Regression Slope calculates the slope/gradient value of regression lines which involve the current price bar and the previous n-1 price bar (where n = regression periods)

 

This Indicator calculates this value and updates it for each price candlestick loaded in the price chart.

 

The Indicator is calculated from the Linear Regression Indicator. The linear regression plots the trend of the price chart over a specified duration of time and this market trend is determined by plotting a Linear Regression Trend Line using the "least squares fit" method. The slope of this trend line is then calculated and this forms the linear regression.

Linear Regression Slope Forex Trading Indicator

Linear Regression Slope

 

The slope values are then smoothed by multiplying the raw slope indicator values by 100 and then dividing this value by the price

 

Linear Slope Regression = (raw value of slope * 100 / price).

 

The smoothing of the slope values is essential when comparing markets that are volatile and trade within wide price ranges for each price candlestick. The smoothed slope value will show the percent change in the price per every candlestick used to calculate the regression (best fit) line.

 

 

Forex Technical Analysis and Generating Forex Trading Signals

 

  • If the smoothing of the slope is 0.30, then the regression line is rising and adjusting at a rate of 0.30% for every candlestick.
  • If the smoothing of the slope of -0.30, then the regression line is going down and adjusting at a rate of -0.30% for every candlestick.

 

The regression slope is displayed as a bi-color histogram that oscillates above and below zero center line. The center line that is used to generate Forex trading signals is set at the 0 level.

 

  • A rising slope (greater than the previous value of 1 candlestick ago) is displayed in the Blue/Upward Slope color,
  • A declining slope (lower than the previous value of 1 candlestick ago) is displayed in the Red/Downward Slope color.

Technical Analysis of Linear Regression Slope Indicator

Technical Analysis

Forex Market Sentiment

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Another reason to start being bullish on the EURUSD and EURJPY is Risk Appetite vs The Risk Averse sentiment used when trading high yielding currencies vs the US Dollar and the Japanese Yen when world economies start reporting data that is supporting economic growth: Read The Article "Risk Appetite vs The Risk Averse"


Eurozone Economic Growth Gains Momentum in November - Eurozone economic growth accelerated to its fastest pace and was at an all-time high, order books grew and factories were prompted to add more workers and raise the prices of their goods as the economic environment in Europe grew the fastest as shown by economic data – November Composite PMI for manufacturing and services grew to the strongest in 18 months and was at an all-time high of 54.1, up from 53.3 in October. There are two PMI data reports - one for manufacturing and the other one for services. The PMI for manufacturing was at an all-time high of 34 months and rose to 53.7 in November while that of services rose to an all-time 11 months high of 54.1; Marking a strong expansion in economic growth and signaling that the recovery in Europe is continuing to gather momentum thanks to the €1.7 trillion quantitative-easing program being carried out by ECB in Europe. IHS Markit has said that companies are on boarding new staff at the fastest pace ever since 2008, as the prices of goods increased the most in five years as companies continued to pass the production cost to their consumers – the November PMI showed the steepest monthly increase in business activity with plenty of signs that the economic growth will continue to accelerate as the inflation in Europe continues to intensify steadily. Open an account and start trading EURUSD and EURJPY today.


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Read The Articles: Eurozone Economic Growth Gains Momentum in November - Fueling Risk Appetite in FX trading


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