Linear Regression Slope

Based on linear regression, this indicator is designed to spot the direction of the current trend.
Linear regression is a statistical tool used to predict the future from past data.

Why should I use it?

The Linear Regression Slope indicator can tell you when the market is in an up trend or a down trend. You can use it to confirm other signals you get form different technical indicators regarding the trend's direction and strength.
In addition you can use the Linear Regression Slope to detect a possible change in trend.

How does it look like?

The Linear Regression Slope is composed out of one line which is drawn under the market price.
The line can have either a negative, or a positive value as it moves above and below zero.

How does it work?

Since the linear regression slope represents the direction of the trend:
If the indicator rises above the 0 value then we are in an uptrend - the higher the indicator is, the more dominant the up trend becomes.
If the indicator moves below the 0 value, then we are in a down trend. The lower the indicator is, the more dominant the downtrend becomes.
It is best to combine this indicator together with another indicator. An example for a good combination would be the Regression slope with the Regression R-Squared indicator.
While Regression Slope gives you the general direction of the trend (an up trend or a down trend), the R-squared gives you the strength of the trend.

Example

This is a daily USDJPY chart with the Linear Regression Slope line drawn under it. Notice how the Linear Regression slope crosses below the 0 value before Aug 27, signaling a new down trend one step ahead of the market, the Indicator is then moving lower to -0.12 ahead of September, indicating a dominant downtrend has formed. The market continues to drop throughout September.