Linear Regression (LINREG)

Overview

The Linear Regression indicator represents a powerful statistical approach to technical analysis, plotting the ending value of a regression line that best fits recent price data. Unlike moving averages that simply average past prices, LINREG calculates where price should statistically be based on the underlying trend, making it significantly more responsive to trend changes. This mathematical precision comes from applying least squares regression analysis to price data, creating a line that minimizes the sum of squared distances between actual prices and the fitted line. The result is an indicator that acts like a "smart" moving average, anticipating price movements rather than merely following them.

What makes LINREG particularly valuable is its dual nature as both a trend-following tool and a forecasting indicator. The slope of the regression line reveals trend strength and direction - steeper slopes indicate stronger trends, while flattening slopes warn of potential reversals. More importantly, LINREG projects where price is expected to be based on statistical probability, allowing traders to identify when price has deviated too far from its expected path. This characteristic makes it excellent for mean reversion strategies, as prices tend to oscillate around the regression line. When combined with channel bands based on standard deviation or ATR, LINREG becomes a complete trading system that identifies trends, forecasts price targets, and highlights overbought/oversold conditions.

Interpretation & Trading Signals

Example Usage

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