Linear Regression Slope Stocks Technical Analysis and Linear Regression Slope Stocks Signals
The Linear Regression Slope calculates the slope/gradient value of regression lines which involve 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 stocks price chart.
The Indicator is calculated from the Linear Regression Stock Technical Indicator. The linear regression plots the stocks trend of the price chart over a specified duration of time and this market stocks trend is determined by plotting a Linear Regression Stocks Trend Line using the "least squares fit" method. The slope of this stocks 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 stocks price
Linear Slope Regression = (raw value of slope * 100 / stocks price).
The smoothing of the slope values is essential when comparing markets that are volatile and trade within wide stocks price ranges for each stocks price candlestick. The smoothed slope value will show the percent change in the stocks price per every candlestick used to calculate the regression (best fit) line.
Stock Technical Analysis and How to Generate Signals
- If the smoothing 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 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 and below zero center line. The center line that is used to generate stock trading signals is set at the 0 level.
- A rising slope (greater than the previous value of 1 candlestick ago) is displayed in the Blue/Upward Slope color,
- A declining slope (lower than the previous value of 1 candlestick ago) is displayed in the Red/Downward Slope color.
Technical Analysis in Stock Trading
