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Linear Regression Stock Indices Technical Analysis and Linear Regression Stock Indices Signals

Another name for a regression line is a line of the best fit/best fit line. This indices technical indicator plots the stock indices trend of the stock index price over a specified duration of time. The market stock indices trend is determined by calculating a Linear Regression Stock Indices Trend Line using the "least squares fit" method. This method helps to minimize the distance between the stock index price data points and the line of best fit.

Linear Regression Technical Stock Indices Indicator

Unlike the straight Regression Trend-Line indicator, the indicator plots 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 the resulting stock indices trend line looks like the 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.

The Linear Regression is a prediction of the tomorrow's stock index price drawn today, one day before. When the stock indices prices are steadily higher or lower than the forecast stock index price, then a Stock Indices trader can expect them to quickly return to more realistic fore-casted levels.

In other terms, this indicator shows where the chart stock indices prices "should" be trading based on a statistical basis and any disproportionate deviation from the regression line is likely to be short-lived.

Stock Indices Technical Analysis and Generating Stock Indices Signals

This indices technical indicator allows for stock index price selection, adjusting number of periods and smoothing of stock index price data before applying the calculation and the selection of smoothing type.

This indices technical indicator looks like a moving average but it has a bi-color representation.

  • Bullish Signal (Blue color) - A rising line (greater than its previous value 1 previous bar before) is displayed in the up stock indices trend blue color, while
  • Bearish Signal (Red color) - a declining line (lower than its previous value 1 previous bar before) is displayed in the down stock indices trend red color.

Linear Regression Technical Stock Indices Indicator

Technical Analysis