Linear Regression Intercept

Linear regression is a statistical tool used to predict the future from past data.
The Linear Regression Intercept calculates a best fitted line to the market price, using the "least squared fit" method.

Why should I use it?

The Linear Regression Intercept is similar to a moving average in the way it looks and the way it is used. However it has a few advantages over a Moving Average.
Since it not represent by an average line, but rather a statistically fitted line, it is more responsive to immediate market movements. Further more, a regression line is attempting to forecast the future, while an average line is merely pointing out the current average price of the last x periods of time.
That is, the Linear Regression Intercept is more predictive in its qualities than a moving average.

How does it look like?

Similar to Moving Averages, the Linear Regression Intercept is a one line indicator, which is drawn on top of the market price.

How does it work?

The most common way to use the Linear Regression Intercept indicator is to trade in the direction of the linear regression line, and spot possible change in market direction when the Linear Regression line is changing its own direction.

Example

In the example below is a EUR/USD hourly chart with the Linear Regression Intercept indicator. The line is continuously moving up, indicating the market is in an uptrend.