Least-Squares Price Channels and Their Slope Angle

Summary

This indicator description explains how least-squares regression can create price channels from recent highs and lows. For a selected lookback period, it fits separate lines to the high and low observations, balancing the distances of the points around each fitted line. An optional setting adds lines representing estimated price variation based on mean squared error.

The indicator reports the fitted slope and its angle relative to the horizontal, along with the line’s intercept and a change measure related to the slope’s tangent. The sign of that change is described as indicating whether the slope is turning toward positive or negative angles. This offers a way to summarize channel direction and dispersion, but the document gives no trading rules, market examples, or backtest results. It also does not specify parameter choices or how the angle should be interpreted across different price scales, so the indicator description alone does not establish predictive value.

Key ideas

• Separate least-squares lines are fitted to recent high and low prices over a chosen period.
• Optional deviation lines use mean squared error to represent possible price variation around the fits.
• The fitted slope is expressed as an angle relative to the horizontal.
• The description provides no tested trading rules or evidence that the indicator predicts returns.

Tags

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