The Linear Regression Curve indicator calculates a centralized line on the chart, commonly referred to as the 'best fit' line, based on price data over a specified period. Unlike moving averages, which generally focus on closing prices, this indicator aims to minimize deviations from a wider range of data points, such as highs, lows, and closes.
The curve may serve as a reference point for assessing the direction of the trend, which could be moving upward, downward, or remaining sideways. Deviations from this curve may offer traders insights into potential shifts in market dynamics.
Linear Regression: The curve that serves as a centralized representation of the price trend.
Parameters:
Price: Although defaulted to 'Close,' this can be changed to 'High,' 'Low,' 'Open,' 'Volume,' or 'VWAP,' altering how the curve is calculated.
Length: Set at 14 periods by default, adjusting this parameter changes the time frame considered for the curve.
Displace: Defaulted at 0, this parameter allows for the shifting of the linear regression line forwards or backwards on the chart.
Linear Regression Curve Indicator on chart
*Please note that these observations are for informational purposes and should not be construed as financial advice.