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)