Linear Regression Slope Indices Technical Analysis and Linear Regression Slope Trading Signals
Linear Regression Slope indicator calculates the slope/gradient value of regression lines which involves the current stock indices trading price bar & the previous n-1 stock indices trading price bar (where n = regression periods)
This Indicator calculates this value and updates it for each stock indices trading price candlestick loaded in the stock indices trading price chart.
The Indicator is calculated from the Linear Regression Indices Technical Indicator. The linear regression plots the indices trend of the stock indices trading price chart over a specified duration of time and this market indices trend is determined by plotting a Linear Regression Indices Trend Line using the "least squares fit" method. The slope of this 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 trading price
Linear Slope Regression = (raw value of slope * 100 / indices trading price).
The smoothing of the slope values is essential when comparing markets which are volatile & trade within wide stock indices trading price ranges for each stock indices trading price candle. The smoothed slope value will show the percent change in the stock indices trading price per every candlestick used to calculate the regression (best fit) line.
Stock Indices Technical Analysis & How to Generate 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 & 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 center line. The center line that is used to generate indices 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.
Technical Analysis in Stock Indices Trading
