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Linear Regression Channel
Posted By: TradersLog
The Linear Regression Channel is created by drawing parallel lines above and below the Linear Regression trendline using two standard deviations.
A Linear Regression Trendline is a straight line drawn through a chart of a security’s prices using the least squares method.
The bottom channel line indicates support and the top channel line indicates resistance. Prices extending outside of the channel may suggest a trend reversal.
Chart courtesy of Prophet Financial Systems (www.prophet.net)
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