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Linear Regression Slope Technical Analysis Signals

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

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

The Indicator is calculated using the Linear Regression Trading Indicator. The linear regression plots the trend of the market price price chart over a specified and given duration of time and this trend is determined by drawing a Linear Regression Trendline using the "least squares fit" method. The slope of this trend line is then calculated & this forms the linear regression.

Linear Regression Slope Technical Analysis

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 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 candle. Smoothed slope value will show the percent change in the price per every candle used in calculating the regression (best fit) line.

FX Technical Analysis & How to Generate 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 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 & below zero centerline. Center Line which is used to generate trading signals is set at the 0 level mark.

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

Linear Regression Slope Indicator - Linear Regression Slope Analysis

Analysis in FX Trading

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