Linear Regression Slope Analysis and Linear Regression Slope Trade Signals
Linear Regression Slope calculates the slope/gradient value of regression lines which involves the current price bar and the previous n-1 price bar (where n = regression periods)
This Indicator calculates this value and updates it for each xauusd price candle loaded in the price chart.
The Indicator is calculated from the Linear Regression Indicator. The linear regression plots the trend of the price chart over a specified duration of time and this market trend is determined by drawing a Linear Regression Trend-Line using "least squares fit" method. The slope of this trendline 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 & then dividing this value by price
Linear Slope Regression = (raw value of the slope * 100 / price).
The smoothing of the slope values is essential when comparing markets that are volatile & trade within wide price ranges for each xauusd gold price candle. Smoothed slope value will show the percent change in the price per every candlestick used to calculate the regression (best fit) line.
XAU/USD Analysis and Generating Signals
- If the smoothing out of the slope is 0.30, then the regression line is rising and adjusting at a rate of 0.30% for every candle.
- If the smoothing out of the slope of -0.30, then the regression line is going down & adjusting at a rate of -0.30% for every candle.
The regression slope is displayed as a bi-color histogram that oscillates above & below the zero center line. Centerline which is used to generate signals is set at 0 mark.
- A rising slope (greater than the previous value of 1 candlestick ago) is displayed in the Blue/Upwards Slope colour,
- A declining slope (lower than the previous value of 1 candlestick ago) is displayed in the Red/Downward Slope color.
Analysis in XAU/USD Trading
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