Linear Regression Indicator

The Linear Regression Channel Indicator gives objective buy and sell signals based on price volatility. It works in real-time on your chart, continuously adapting to market movements. The upper and lower channels (linear regression lines) contain between themselves either 68% of all prices (if one standard deviation is used) or 95% of all prices (if two standard deviations are used). When prices break outside of the channels, either Buy or Sell opportunities are present, or else the prior trend could be ending. When price falls below the lower channel line, a Buy signal is usually triggered and when prices break above the upper channel line, an opportunity for Selling occurs. Also, when price closes outside of the Linear Regression Channel for long periods of time, this is often interpreted as an early signal that the past price trend may be breaking and a significant reversal could be near.

The Linear Regression Channel is a very useful technical analysis charting tool. In addition to identifying trends and trend direction, the use of standard deviation gives you an idea as to when prices are becoming overbought or oversold relative to the current trend.

Combine this indicator with the Value Chart Indicator to make a great scalping setup.

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