Linear Regression Slope Stock Indices Technical Analysis and Linear Regression Slope Stock Indices Signals
The Linear Regression Slope calculates the slope/gradient value of regression lines which involve the current stock index price bar and the previous n-1 stock index price bar (where n = regression periods)
This Indicator calculates this value and updates it for each stock index price candlestick loaded in the stock index price chart.
The Indicator is calculated from the Linear Regression Stock Index Indicator. The linear regression plots the stock indices trend of the stock index price chart over a specified duration of time and this market stock indices trend is determined by plotting a Linear Regression Stock Indices Trend Line using the "least squares fit" method. The slope of this stock indices 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 indices price
Linear Slope Regression = (raw value of slope * 100 / indices price).
The smoothing of the slope values is essential when comparing markets that are volatile and trade within wide stock index price ranges for each stock index price candlestick. The smoothed slope value will show the percent change in the stock index price per every candlestick used to calculate the regression (best fit) line.
Stock Indices Technical Analysis and Generating Stock Indices Signals
- If the smoothing 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 and below zero center line. The center line that is used to generate stock index trading signals is set at the 0 level.
- A rising slope (greater than the previous value of 1 candlestick ago) is displayed in the Blue/Upward Slope color,
- A declining slope (lower than the previous value of 1 candlestick ago) is displayed in the Red/Downward Slope color.