Linear Regression Stocks Technical Analysis and Linear Regression Stocks Signals

Another name for a regression line is a line of the best fit/best fit line. This stocks indicator plots the stocks trend of the stocks price over a specified duration of time. The market stocks trend is determined by calculating a Linear Regression Stocks Trend Line using the "least squares fit" method. This method helps to minimize the distance between the stocks price data points and the line of best fit.

Unlike the straight Regression Trendline technical indicator, the technical indicator plots the end values of multiple Linear Regression trend lines. Any single point along the Linear Regression will be equivalent to the end value of a Regression Trend-line, but resulting stocks trendline looks like the Moving Average.

But unlike the Moving Average, this indicator does not show as much delay since it is fitting a line onto data points rather than averaging them.

The Linear Regression is a prediction of the tomorrow's stocks price drawn today, one day before. When the stocks prices are steadily higher or lower than the forecast stocks price, then a trader can expect them to quickly return to more realistic fore-casted levels.

In other terms, this indicator shows where the chart stocks prices "should" be trading based on a statistical basis and any disproportionate deviation from the regression line is likely to be short-lived.

Stock Technical Analysis & Generating Stocks Signals

This stocks indicator allows for stocks price selection, adjusting number of periods and smoothing of stocks price data before applying the calculation and the selection of smoothing type.

This stocks technical indicator looks like a moving average but it has a bi-color representation.

• Bullish Signal (Blue color) - A rising line (greater than its previous value 1 previous bar before) is displayed in the up stocks trend blue color, while
• Bearish Signal (Red color) - a declining line (lower than its previous value 1 previous bar before) is displayed in the down stocks trend red color.

Technical Analysis in Stock Trading