Linear Regression Analysis and Linear Regression Signals
Another name for a regression line is a line of the best fit/best fit line. This indicator plots the trend of the price over a specified duration of time. The market trend is determined by calculating a Linear Regression Trendline using "least squares fit" method. This method helps to minimize the distance between the price data points and the line of best fit.
Unlike the straight Regression Trend Line technical indicator, the technical indicator draws the end values of multiple Linear Regression trend-lines. Any single point along the Linear Regression will be equal to the end value of a Regression Trend-Line, but resulting trend-line looks like the MA Moving Average.
But unlike the Moving Average, this indicator does not show as much delay since it is fitting a line onto data points rather than averaging them.
Linear Regression is a prediction of the tomorrow's price drawn today, one day before. When the prices are steadily higher or lower than the +forecastforecasted trading price, then a gold trader can expect them to quickly return to more realistic fore-casted levels.
In other terms, this technical indicator shows where the chart prices "should" be trading based on a statistical basis and any disproportionate deviation from the regression line is likely to be short-lived.
Gold Analysis and How to Generate Signals
This technical indicator allows for price selection, adjusting number of periods and smoothing of price info before applying the calculation & the selection of smoothing type.
This indicator looks like a MA but it has a bi-colour representation.
- Bullish Signal (Blue color) - A rising line (greater than its previous value 1 previous bar before) is displayed in the up-trend blue colour, while
- Bearish Signal (Red color) - a declining line (lower than its previous value 1 previous bar before) is displayed in the down-trend red colour.
Technical Analysis in Gold Trading
More Courses and Tutorials:
- How to Add Channel Trading Indicator on MT4 Charts
- How to Read Different Types of Gold Patterns for Beginners
- EU50 Indices Strategy List & Best EU50 Indices Strategy to Trade EU50
- McClellan MT4 Indicator in FX
- How to Calculate AUD HKD Pip
- Momentum Market Trends Trade Parabolic Gold Price Trends
- FTSE 100 Stock Indices
- How Can You Add Chart in MT4 Software?
- CADJPY Opening Time & CADJPY Closing Time
