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Linear Regression Slope Technical Analysis & Linear Regression Slope Signals

Linear Regression Slope calculates the slope/gradient value of regression lines which involves the current price bar & the previous n-1 price bar (where n = regression periods)

This indicator computes the value and refreshes it for each new candle on the chart.

The Indicator is calculated from the Linear Regression Indicator. The linear regression plots/draws the trend of the trading price chart over a given duration of time and this trend is determined by plotting a Linear Regression Trendline using the "least square fit" method. The slope of this trend-line is then calculated and this forms the linear regression.

Linear Regression Slope Technical Indicator - Linear Regression Slope Indicator Analysis

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 trading price

Linear Slope Regression = (raw value of slope * 100 / price).

The smoothing of the slope values is essential when comparing markets which are volatile & trade within wide trading price ranges for each price candle. The smoothed slope value will show the % change in the trading price per every candlestick used in calculating the regression (best fit) line.

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  • 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 candlestick.
  • If the smoothing out of the slope of -0.30, then the regression line is going downward and adjusting at a rate of -0.30% for every candlestick.

The regression slope shows up as a two-color histogram, moving above and below the zero line. The centerline for signals sits right at zero.

  • A rising slope (greater than the previous value of 1 candlestick ago) is displayed in the Blue/Upwards Slope color,
  • A declining slope (lower than the previous value of 1 candlestick ago) is displayed in the Red/Downwards Slope color.

Linear Regression Slope Indicator - Linear Regression Slope Index Technical Indicator Analysis

Technical Analysis in Indices Trade

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