Linear Regression

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Adding Regression Lines

With the Linear Regression function, the Bourse uses the least squares method of determining the straight line of best fit between two dates you select. This is the line which gets as close as possible to as many prices as possible, and can be regarded as a trend line and line of equilibrium. A regression channel is created when a parallel line is plotted above and below the regression line the maximum distance of any price from the line. The top and bottom lines may be interpreted as support and resistance. Sustained price movement outside the channel would signify a change in trend. Prices within the channel but above the regression line would be considered overbought, those below it, oversold.