Channels
Linear regression and standard deviation channels
A best-fit line through the closes of a chosen period, with parallel lines showing how far prices strayed from it.
La idea en pocas palabras
Instead of picking points by eye, let maths draw the line that best fits the prices. The outer lines show the normal spread (standard deviation channel) or the widest deviation (regression channel).
Cómo se calcula
Click the start and the end of the period. The centre line is the least-squares line through the closes. Standard deviation channel: ± 2 standard deviations; regression channel: ± the largest distance.
Centre = a + b × t (least-squares fit of the closes)
Std-dev channel: centre ± 2 × standard deviation of the distances
Regression channel: centre ± maximum distanceCómo usarlo
- Prices near the outer lines are stretched relative to the trend; near the centre, fairly valued.
- The slope of the centre line is the average trend over the period.
Sacar conclusiones
- A close outside a standard deviation channel is statistically unusual.
Ejemplo
A 60-day regression on a stock index slopes up 0.2% a day; the price touches the lower line and rebounds to the centre.
Los precios de los ejemplos son ilustrativos.
Ten cuidado con
- The channel changes when you change the period: choose it deliberately.
Un poco de historia
Least squares was published by Legendre (1805) and Gauss; Francis Galton coined "regression" in the 1880s.
Solo contenido educativo. Ningún indicador ni patrón predice el futuro, y nada de lo aquí expuesto es asesoramiento de inversión.