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# Miscellaneous > SEB LinRegSlope

Article/Author: "Standard Error Bands" Jon Anderson, Stocks&Commodities Magazine, Traders Tips, 09/1996

File Includes: Indicator - SEB LinRegSlope

Category: Miscellaneous > SEB LinRegSlope

Description:

This indicator plots the slope of linear regression in osccilator-like manner. This is a part of Standard Error Bands study.

Linear Regression is a concept also know as the "least squares method" or "best fit". Linear Regression attempts to fit a straight line between several data points in such a way that distance between each data point and the line is minimized.

Usage:

This indicator should be used together with %A and R-squared indicators and Bollinger bands.

First of all, locate areas of low volatility indicated by tight Bollinger bands. Once these areas have been determined, find areas where the R-squared is in the lower 15th percentile and turning upward. This indicates areas of exhausted consolidation. Next, look for the standard error bands to turn upward with the price heading toward the upper band. This can be easily seen by gauging the %A indicator and the regression slope. Also, note the overall trend of the %A indicator. When this indicator rises gradually toward the level of 1 instead of abruptly, it is often a leading indication of trend direction, and serves as confirmation to the overall signal.

Short signals are determined in the same manner. Look for the Bollinger bands to be tight, and for the R-squared to be in the lower 15th percentile turning upward. Next, look for the standard error bands to be turning downward with the price moving toward the lower band. This can easily be seen with the %A and the regression slopes. In addition, as with the buy signal, look to see the standard error bands tighten as the trend moves downward.

Inputs:

Lenght - number of bars to calculate

EasyLanguage Code:
```INPUTS: LENGTH(21);
VARS: LRS(0), ZERO(0);

LRS = LINEARREGSLOPE(CLOSE, LENGTH);

PLOT1(LRS, "REGSLOPE");
PLOT2(ZERO, "ZERO");

{COPYRIGHT C 1997, TECHNICAL ANALYSIS, INC.}```