Linear Regression Slope Analysis and Linear Regression Slope Trading 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 candlestick loaded in the price chart.

The Indicator is calculated from the Linear Regression Technical 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 the "least squares fit" method. The slope of this 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 & then dividing this value by price

Linear Slope Regression = (raw value of 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 price candle. Smoothed slope value will show the percent change in the price per every candlestick used to calculate the regression (best fit) line.

XAUUSD Analysis and Generating Signals

• If the smoothing of the slope is 0.30, then the regression line is rising & 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 & below zero center line. Center-line which's used to generate signals is set at the 0 level.

• A rising slope (greater than the previous value of 1 candle 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.

Analysis in XAUUSD Trading