Toolkit for Regression Line
The toolkit has 4 indicators enabling to understand market intentions. They have one operating principle: their signals are based on difference in positions of regression line (RL) drawn per a current timeframe and the smallest timeframe (TF) over one period.
Why does this difference occur? A regression line, or the best fitting line, is a right line drawn in such a way that the sum of distances to this line is equal to zero. I.e. every point on the time frame being under review is taken into consideration. It is obvious that a smaller TF has more points. It is also clear that a group of points in the upper part will move the RL up.
I.e. joint consideration of two RLs enables to evaluate not only a trend but also an "impulse" which it sends to the next candle.
The kit includes:
One Bar. Every bar contains a number of bars of a smaller TF. What if we look inside of the bar and examine not only a result of its "growth", but also the way it was developing? Did it complete its development being on top or in bottom?
The RL is drawn from the first to the last bar of the smaller TF which compose a bar of the highest timeframe. Corresponding price is compared to the RL beginning. Higher value indicates a bullish bar, lower value indicates a bearish bar.
Real Angle. Indicates a number of points passed by a price per bar of the current TF. A buy signal is a line corresponding to the current TF located above the smallest TF line. Location under the TF indicates a sell signal.
A position relative to the zero line is also a signal. If values are under the zero line, the RL is downward-sloping, i.e. the price is falling. If values are above the zero line, the price is rising.
Main Mode (Difference H,L). This indicator deals with difference among RLs inclinations. Display for 3 types of price: High, Low, and control price selected by you.
Position of the control line and the High line above the zero line is a buy signal. Position of the control line and the Low line under the zero line is a sell signal.
Main Mode with arrows. The same as in the previous indicator, but we introduced an arrow indicator for simplicity.
Up arrow - buying conditions are fulfilled, and the current value of a control price is higher than 2 previous values.
Down arrow - selling conditions are fulfilled, and the current value of a control price is lower than 2 previous values.
Line Difference. Makes it possible to compare position of a RL drawn per two TFs. Displays difference of an inclination angle, position of the beginning and end of the RL. Position of the last value is reversed to make it look less complicated.
Specify the type of price the indicator is applied to.
Mode. Select an indicator from the kit.
Period. Period for the RL drawing on the current TF. Smoothing period in One Bar mode.
Previous period. Possible choices:
- auto calculation: previous or next TF is used as the smallest TF;
- direct indication.
- M30 is ignored as intermediate;
- there might be problems with calculation time or history availability in case of direct indication.
Price type. Price type. It is a control price for the Main Mode and the only used price for other modes.
MA Mode (for 'One Bar' Mode). Select a method of smoothing. For One Bar Mode only.
Limit bars to count. The indicator makes quite a lot of calculations, so in the process of initiation it can slow down the system (in the process of initiation only!). To minimize this effect, we can limit the calculated history depth. No limits for 0 value.
When launched for the first time, distortion of results due to absence of the smallest TF history is possible. Just switch to this TF, and the history will be loaded. Then go back.
The indicator in the Main Mode is designed for intraday trading. Trustworthiness on a TF higher Н4 is quite low. I like М15.
Others work on any TF.
See also Regression Line indicator: