Linear Regression Slope Commodities Technical Analysis and Linear Regression Slope Trading Signals

Linear Regression Slope indicator calculates the slope/gradient value of regression lines which involves the current commodities price bar and the previous n-1 commodities price bar (where n = regression periods)

This Indicator calculates this value and updates it for each commodities price candlestick loaded in the commodities price chart.

The Indicator is calculated from the Linear Regression Commodity Trading Indicator. The linear regression plots the commodity trend of the commodities price chart over a specified duration of time and this market commodity trend is determined by plotting a Linear Regression Commodities Trend Line using the "least squares fit" method. The slope of this commodity trend line is then calculated and this forms the linear regression.

Linear Regression Slope

The slope values are then smoothed by multiplying the raw slope indicator values by 100 and then dividing this value by the commodities price

Linear Slope Regression = (raw value of slope * 100 / commodities price).

The smoothing of the slope values is essential when comparing markets which are volatile & trade within wide commodities price ranges for each commodities price candle. Smoothed slope value will show the percent change in the commodities price per every candle used to calculate the regression (best fit) line.

Commodity Technical Analysis & How to Generate Trading Signals

• If the smoothing of the slope is 0.30, then the regression line is rising and adjusting at a rate of 0.30% for every candle.
• If the smoothing of the slope of -0.30, then the regression line is going down and adjusting at a rate of -0.30% for every candle.

The regression slope is displayed as a bi-color histogram that oscillates above & below zero center line. Center line that is used to generate commodities signals is set at the 0 level.

• A rising slope (greater than the previous value of 1 candle ago) is displayed in the Blue/Upward Slope color,
• A declining slope (lower than the previous value of 1 candle ago) is displayed in the Red/Downward Slope color.

Technical Analysis in Commodity Trading