Forex Ninja Linear Regression Channels Indicator for Metatrader 4 – Forex Ninja3827670

Linear Regression Channels Indicator is a custom built indicator for Metatrader 4 that graphically displays the linear regression line and a variable number of outside regression channels. The indicator updates automatically on your chart with the latest candle or bar to conform to the latest real-time price data. “A statistical technique in which one takes a set of data points and plots them on a line. Linear regression is used to determine trends in economic data. “ by thefreedictionary.com

In simple terms, classical linear regression analysis attempts to best fit a line between the data points (or prices) that occur over a specified time period.

From a trading perspective, plotting a linear regression line on your chart can show you the recent trends of forex prices. The directional slope of the regression line as an upward sloping line would indicate a bullish trend or a downwards sloping line would signal a bearish trend over a specified timeframe.

The Linear Regression Channels, in addition to the regression line, can give you more information by analyzing how far price has moved away from the Regression line. When prices sharply distance themselves (measured in standard deviations) from the regression line, it can signal an extreme price position. Prices may be setting up for a reversal or the previous trend is not holding and changing. Quantitative traders and analysts have been known to utilize linear regression in their trading due to the mathematical nature of this indicator. In addition to identifying a simple trend direction of the linear regression line on your chart, more advanced forecasting strategies can also be worthwhile to experiment with. Equilibrium Price: The far right of the regression line can indicate the current “equilibrium” price point or fair value price that best fits the data over your specified…

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