Forex linear regression

The forex linear regression is one trading style that favors no particular market condition over another because it is based on general statistical concepts. By definition, the forex linear regression is an attempt to model the relationship between two variables considering a set of data values. The aim of the relationship model is to find the best fit that can serve the two unknown values without putting the other at a disadvantage.

In this case, the two variables are price and time, two most basic factors in the forex market. The forex linear regression works in such a way that one can supposedly gain insight into the future performance of the market at a point that can be said to be the best fit for time and price of a given commodity. What is this line of best fit? Simply put, this special line is what is popularly known as trend; the market keeps depreciating and appreciating erratically, but is generally moving towards a particular direction. That is not all, with a trend regression indicator, one is provided with the channels that can help indicate support and resistance. Support and resistance are popular terms in the forex market, not because they sound good, but because identifying them can be the best thing to happen to a trader in a forex transaction.

SUPPORT, RESISTANCE, AND FOREX LINEAR REGRESSION

Naturally, nothing is static in the forex market, price the least. It keeps going up and down at odd times, and with no good trading skills and aides, anyone can get easily confused as to when to buy, sell, or exit a trade. On a more careful look, the charts will show that the market is moving either higher in price from point A to point B, or the other way round. If the price happens to go higher than a specified point, it changes the whole thing, and traders start to look at the market in a different way, however, within the time the market price is bouncing around between two obvious price levels, there is a greater tendency to predict the market, trade better, and ultimately, make good profits. That is what support and resistance is all about, and a forex linear regression indicator can provide channels that can help indicate support and resistance in a trade.

Resistance is the highest point the price of a security gets to before it begins to fall, while support is the highest price a security gets to before it begins to appreciate.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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