R - Squared indicator - indicator for MetaTrader 4

R-Squared shows the correlation with its linear regression line values close to 1.0 show perfect relation values close to 0.0 show poor relation.

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To determine if the trend is statistically significant for a given x-period linear regression line, plot the r-squared indicator and refer to the following table.  This table shows the values of r-squared required for a 95% confidence level at various time periods.  If the r-squared value is less than the critical values shown, you should assume that prices show no statistically significant trend.

Number ofPeriods r-squaredCritical Value(95%confidence):

      5                 0.77
      10                0.40
      14                0.27
      20                0.20
      25                0.16
      30                0.13
      50                0.08
      60                0.06
      120               0.03

You may even consider opening a short-term position opposite the prevailing trend when you observe r-squared rounding off at extreme levels.  For example, if the slope is positive and  r-squared is above 0.80 and begins to turn down, you may consider selling or opening a short position.
There are numerous ways to use the linear regression outputs of r-squared and Slope in trading  systems.  For more detailed coverage, refer to the book The New Technical Trader by Tushar Chande  and Stanley Kroll.