Linear Regression Channels (LRC)
A Linear Regression Channel is a indicator used to determine the trend a security is developing and the most probable price range that will take place within that trend.
Linear Regression Channels
A technical indicator used to determine the trend a security is developing and the likely price range that will take place within that trend.
Regression Channels: Linear regression is a statistical tool used to...
Gann Studies: W. D. Gann (1878-1955) designed several unique...
Fibonacci Studies: Leonardo Fibonacci was an important mathematician...
Linear Regression Channels are quite useful technical analysis charting tools.
An extension to this is 'Linear Regression Channels' - rather like Bollinger Bands, these are two parallel lines above and below the trendline at a fixed distance (the maximum distance in the timeframe under examination).
It's tempting to try to pinpoint an exact low, especially if you're working with indictors like Fibonacci fan and time lines, cycle studies, regression channels, even plain old lateral support points.
On the longer period charts (anything over 65 minutes) I have three regression channels with 2 Std Dev, 3 Std Dev and 4 Std Dev (with different colors) distances.
A Linear Regression trendline shows where equilibrium exists. Linear Regression Channels show the range prices can be expected to deviate from a Linear Regression trendline.
Raff regression Channels contain price movement, with the bottom channel line providing support and the top channel line providing resistance. Prices may extend outside of the channel for a short period of time.
Unlike Linear Regression trendline whose purpose is to show the equilibrium price Linear Regression Channels are the indicators of possible price fluctuations from the trendline.
 See also: Regression, Channel, Linear Regression, Chart, Indicator
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