Linear Regression Slope Oil Trading Technical Analysis & Linear Regression Slope Trading Signals

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

This Indicator calculates this value and updates it for each crude oil price candlestick loaded in the crude oil price chart.

The Indicator is calculated from the Linear Regression Oil Technical Indicator. The linear regression plots the oil trend of the crude oil price chart over a specified duration of time and this market oil trend is determined by plotting a Linear Regression Oil Trading Trend Line using the "least squares fit" method. The slope of this oil 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 oil price

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

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

Oil Trading Technical 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 oil 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 Oil Trading