Linear Regression Slope Analysis & Linear Regression Slope Signals

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

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

The Indicator is calculated using the Linear Regression Indicator. The linear regression plots the trend of the price chart over a given duration of time and this price trend is determined by drawing a Linear Regression Trend-Line using the "least squares fit" method. The slope of this trendline 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 & then dividing this value by price

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

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

XAU/USD Analysis and Generating Signals

• If the smoothing out of the slope is 0.30, then the regression line is rising and 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 & adjusting at a rate of -0.30% for every candle.

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

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

Analysis in XAU/USD

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