Linear Regression Slope Stock Analysis & Linear Regression Slope Trading Signals
The Linear Regression Slope indicator calculates the slope/gradient value of regression lines which involves the current stocks price bar and the previous n-1 stocks price bar (where n = regression periods)
This Indicator calculates this value and updates it for each stocks price candlestick loaded in the stock trading price chart.
The Indicator is calculated from the Linear Regression Stock Technical Indicator. The linear regression plots the stock trend of the stocks price chart over a specified duration of time and this market stock trend is determined by plotting a Linear Regression Stock Trend Line using the "least squares fit" method. The slope of this stock 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 stock trading price
Linear Slope Regression = (raw value of slope * 100 / stock price).
The smoothing of the slope values is essential when comparing markets which are volatile & trade within wide stocks price ranges for each stocks price candle. The smoothed slope value will show the percent change in the stocks price per every candlestick used to calculate the regression (best fit) line.
Stocks Trading 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 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. The center line that is used to generate stock signals is set at the 0 level.
- 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.
Technical Analysis in Stocks Trading
