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

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

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

The Indicator is calculated from the Linear Regression Crude Trading Indicator. The linear regression plots the oil trend of the crude oil price chart over a specified duration of time and this market oil trend is determined by plotting a Linear Regression Oil Trend Line using the "least squares fit" method. The slope of this oil 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 crude oil price

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

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

Oil Technical Analysis & How to Generate Crude 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 oil 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 Oil Trading