Linear regression channel

The best-fit straight line through the last N bars, with a band of its typical miss.

Formula

Channel = fitted line ± multiplier × standard deviation of the residuals

How to read it

Price near the upper band is stretched above its trend, near the lower band below it.

How to use it

Frames a steady trend and its normal swing.

Limitations

One line over one window: fitted after the fact, and redrawn as new bars arrive.

In Kereon

Charts · Superchart. Default 100 bars, ± 2 deviations; drawn only over the window it was fitted to.

Also called: regression channel, trend channel, raff.

Related terms

The whole glossary · Investing tools