The usage ofLinear Regression slopeis prediction of the following forex market values based on the previous ones. It is considered as a statistical engine. The linear Regression is usually drawn as a straight line, similar to a trend line on a price chart. Still the linear regression indicator does not correspond to a straight line following the price fluctuations while being traced.
Each end point of an imaginary linear regression trend line makes up a path for this curve. All these imaginary trend lines are placed at nearest distance (length) to the closing prices through ‘least squares’ method applied to the input set bars.
It helps to find out the possible values of the forex market’s prices in the predicted future according to recent and present data. If a price trend raises or descends, the linear regression suggests the possible angle of an uptrend/downtrend basing on the current price. It is thought that if the price differs from the linear regression line, it gets too strained and starts motion in direction to the line. Thereby this monitor allows us to understand the moment of price trend change.
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