Linear Regression Intercept (LRI)

Overview

The Linear Regression Intercept (LRI) represents a sophisticated statistical approach to identifying baseline price levels by calculating where a regression line would intersect the y-axis at time zero. Unlike traditional moving averages that simply smooth price data, the LRI provides a mathematical foundation for understanding intrinsic value based on the linear regression equation y = mx + b, where 'b' is the intercept. This indicator plots a moving calculation of intercept values, creating a dynamic baseline that adapts to changing market conditions while maintaining statistical rigor. The result is a powerful tool that reveals whether current prices are trading above or below their mathematically expected baseline value.

What makes the LRI particularly valuable is its ability to act as a dynamic equilibrium line that responds faster than traditional moving averages to trend changes. When combined with the Linear Regression Forecast (LRF), the LRI creates a complete statistical framework for price analysis - the LRF shows where price is expected to be, while the LRI shows the baseline from which that expectation is calculated. A rising LRI indicates an upward-shifting baseline suggesting accumulation, while a falling LRI warns of distribution as the statistical foundation weakens. The indicator excels in ranging markets where prices oscillate around the intercept value, and in trending markets where sustained moves above or below the LRI confirm trend strength. Short-term traders particularly value the LRI for its responsiveness on intraday charts, where it provides cleaner signals than traditional indicators.

Interpretation & Trading Signals

Example Usage

Code examples will be available once the Rust implementation is complete.