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