Adaptive Regression Channels Selected by Fit, Trend Quality, and Stability

Summary

This indicator selects regression channels by comparing multiple lookback periods instead of relying on one fixed window. For each candidate, it fits a linear regression to closing prices and sets upper and lower bands using standard deviation. A composite score weighs trend efficiency, Pearson correlation, channel width, price containment, and ADX; eligibility thresholds screen out weak fits. Similar scores among neighboring periods earn a stability bonus, and the highest-ranked eligible candidate is preferred, with a fallback when none qualify.

Short- and long-horizon channels are selected independently and displayed with a midline and bands. The document discusses reading slope as trend direction, band touches as possible pullback areas, and closes beyond bands as possible breaks. These are interpretations rather than tested trading rules: the document provides no performance study or evidence that channel signals are profitable. Results depend on the chosen candidate periods, scoring weights, thresholds, and instrument. It also notes that computation is restricted to the last chart bar to keep the indicator responsive.

Key ideas

• The indicator searches several regression lookbacks and selects a channel using a weighted quality score.
• The score combines trend efficiency, linear fit, width, containment, and ADX, with a bonus for stability across neighboring periods.
• Short- and long-term channels are selected separately, and an ineligible fallback can be displayed.
• The author suggests using channel slope and band interactions to interpret trend, pullbacks, and possible breaks.
• The document does not provide backtest evidence, so these chart interpretations should not be treated as validated trading signals.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.