In statistics, linear regression is a method of estimating the conditional expected value of one variable ygiven the values of some other variable or variables x.The Linear Regression Forecast indicators optionally smoothes the price data, performs a regression on the result, forecasts the regression lines if desired, and then optionally creates standard deviations bands above and below the regression line.
First, the data, based on the price selected, is smoothed using the moving average period and type. The resulting data is then used to form regression lines ending at each bar, using the regression period specified. The values at each bar can optionally be forecasted values, determined by projecting the regression lines X bars into the future, X being the forecast period. If X=0, then no forecasting will occur. Standard deviation bands can then be drawn above and below the regression line, based on a number of standard deviations (standard deviation multiple) specified, and a standard deviation value computed using data in the the regression period range.
It is use as the overall trend line for that given period & support and resistance level. It displays the statistical trend of a security’s price over a specified time period. The trend is based on linear regression analysis.