Linear Regression Acceleration Indices Technical Analysis & Trading Signals
Linear Regression Acceleration calculates the change in the regression line's gradient on the current stock indices price bar from its gradient from the previous stock indices price bar. The value used to calculate the linear regression is referred to as the normalized acceleration value which is drawn for each stock indices price bar formed on the stock indices price chart.
Linear Regression Acceleration
If normalized acceleration is 0.30, then regression line normalized slope will be rising at rate of 0.30 per stock indices price bar.
Similarly, a normalized slope of -0.40 would indicate that the regression line normalized slope is declining at rate of -0.40 per stock indices price bar.
For example, if the current stock indices price bar normalized slope value is 0.40 and the previous stock indices price bar normalized slope value is 0.20, then the normalized acceleration of the current stock indices price bar would be calculated as 0.40 - 0.20 = 0.20.
Note: It's important to realize that a positive acceleration value does not equate to a positive slope value, it simply means the gradient of the slope is increasing. A negative acceleration value doesn't equate to a negative slope value, it simply means the gradient of slope is decreasing.
Implementation of Linear Acceleration Regression Technical Indicator
The Linear Regression Acceleration indicator allows for the following; stock indices price selection, regression periods, smoothing of raw stock indices price before applying the regression and selection of the smoothing type.
The resulting regression slope is displayed as a bi-colored histogram that oscillates above and below 0.
The reference line is set at the 0 level mark.
- A rising slope: (greater than its previous value of 1 bar before) is displayed in up slope color.
- A declining slope: (lower than its previous value of 1 bar before) is shown using the down slope color.
