Linear Regression Slope Commodity Trading Technical Analysis & Linear Regression Slope Trading Signals
Linear Regression Slope indicator calculates slope/gradient value of regression lines which involves the current commodity price bar and the previous n-1 commodity price bar (where n = regression periods)
This Indicator calculates this value and updates it for each commodity price candlestick loaded in the commodity price chart.
The Indicator is calculated from the Linear Regression Commodity Technical Indicator. The linear regression plots the commodity trend of the price chart over a specified duration of time and this market commodity trend is determined by plotting a Linear Regression Commodity Trading Trend Line using the "least squares fit" method. The slope of this commodity trend line is then calculated and this forms the linear regression.
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 commodity price
Linear Slope Regression = (raw value of slope * 100 / commodity price).
The smoothing of the slope values is essential when comparing markets that are volatile & trade within wide commodity price ranges for each commodity price candle. Smoothed slope value will show the percent change in the commodity price per every candle used to calculate the regression (best fit) line.
Commodity Analysis & Generating Trading Signals
- If the smoothing of the slope is 0.30, then the regression line is rising & adjusting at a rate of 0.30% for every candle.
- 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 candle.
The regression slope is displayed as a bi-color histogram that oscillates above and below zero center line. Center-line that's used to generate commodity trading signals is set at the 0 level.
- A rising slope (greater than the previous value of 1 candle ago) is displayed in the Blue/Upwards Slope color,
- A declining slope (lower than the previous value of 1 candle ago) is displayed in the Red/Downwards Slope color.
Technical Analysis in Commodity Trading
