Description
The Linear Regression Channel comprises five plots: the linear regression (LR), two lower bands (LB), and two upper bands (UB). The bands are plotted a specified number of standard deviations above and below the regression line.
The Linear Regression Channel is often employed to indicate Buy/Sell signals and Trend Reversals. More specifically, it is considered a Buy signal when prices fall below the Lower Band, while overtaking the Upper Band suggests the Sell signal. It is often interpreted as an early Trend Reversal signal when Close prices are located out of the Linear Regression Channel for a long time period.
Input Parameters
| Parameter | Description |
|---|---|
price
|
The price used to calculate the LRC. |
length
|
The number of bars used to calculate the LRC. |
begin date
|
Defines the date (YYYYMMDD format) for the starting point of the LRC. Note that non-zero values of this parameter override the value of the "length" parameter. |
begin time
|
Defines the time (HHMM format) for the starting point of the LRC. |
num dev dn1
|
The number of deviations to plot the first lower band. |
num dev dn2
|
The number of deviations to plot the second lower band. |
num dev up1
|
The number of deviations to plot the first upper band. |
num dev up2
|
The number of deviations to plot the second upper band. |
ext left
|
Defines whether or not the LRC is extended to the left. |
ext right
|
Defines whether or not the LRC is extended to the right. |
Plots
| Plot | Description |
|---|---|
LR
|
The linear regression. |
UB1
|
The first upper band. |
LB1
|
The first lower band. |
UB2
|
The second upper band. |
LB2
|
The second lower band. |
Example*
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.