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Linear Regression Channel

Also part of this indicator is the Linear Regression Line or Line of Best Fit. This indicator is a straight line on the chart that it is always the smallest amount of space from all the price ticks. And let's you clearly see the trend of the price direction. It is a true or pure trend line.

The line in the middle is the Linear Regression Line.
The lines at the top and bottom make up the Linear Regression Channel.

This is somewhat difficult to comprehend so let's look at the example below.

Example

Interpretation

When price falls below the Linear Regression Line, this is a bullish signal, because you expect price to rise towards the line again soon. Also, when price moves under the Linear Regression Channel, this is a bullish signal, because this is at an extreme of the price.

When price rises above the Linear Regression Line, this is a bearish signal, because you expect price to fall towards the line again. Also, when price moves above the Linear Regression Channel, this is a bearish signal, because this is at an extreme of the price.

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