Linear Regression Gold Trading Analysis & Linear Regression Trading Signals
Another name for a regression line is a line of the best fit/best fit line. This gold indicator plots the gold trend of the xauusd trading price over a specified duration of time. The market gold trend is determined by calculating a Linear Regression Gold Trend Line using the "least squares fit" method. This method helps to minimize the distance between the xauusd price data points & the line of best fit.
Unlike the straight Regression Trendline technical indicator, the technical indicator plots the end values of multiple Linear Regression trend lines. Any single point along the Linear Regression will be equal to the end value of a Regression Trend-line, but resulting gold trendline looks like the Moving Average.
But unlike the Moving Average, this indicator doesn't show as much delay since it is fitting a line onto data points rather than averaging them.
The Linear Regression is a prediction of the tomorrow's xauusd trading price drawn today, one day before. When the xauusd trading prices are steadily higher or lower than the forecast xauusd trading price, then a trader can expect them to quickly return to more realistic fore-casted levels.
In other terms, this indicator shows where the chart xauusd prices "should" be trading based on a statistical basis & any disproportionate deviation from the regression line is likely to be short-lived.
XAUUSD Analysis & How to Generate Signals
This gold indicator allows for xauusd trading price selection, adjusting number of periods and smoothing of xauusd price data before applying the calculation & the selection of smoothing type.
This gold technical indicator looks like a moving average but it has a bi-color representation.
- Bullish Signal (Blue color) - A rising line (greater than its previous value 1 previous bar before) is displayed in the up gold trend blue color, while
- Bearish Signal (Red color) - a declining line (lower than its previous value 1 previous bar before) is displayed in the down gold trend red color.
Technical Analysis in XAUUSD Trading
