Regression Channel
The Regression Channel is an analytical drawing tool used to precisely define a price trend and its boundaries with regard to the support and resistance levels. To create the Regression Channel two parallel equidistant lines are drawn above and below a linear regression regression channel that is based on a user specified price (High, Low, Open, Close). The bottom line is the support level, and the top line - the resistance level. All these channels are based on the linear regression regression channel.
Prices may extend outside the channel for a short period of time. But if prices stay outside the Regression Channel for a long period of time, a reversal trend may occur.
The distance of the channel lines from the median regression line is based on either:
- The highest point among the peaks and lowest point among the troughs between the points upon which the median regression line is drawn.
- A user specified number of standard deviations above/below the median regression line.
- The maximal upward or downward oscillation.
- A user specified number of standard errors above/below the median regression line.
Markets tend to have a "balancing point" that is a point towards which prices tend to move. The Regression analysis allows you to determine this "balancing point". On the other hand, the Standard Error analysis helps determine the "extreme points".
In MultiCharts there are 4 types of regression channels:
- Segment High-Low.
- Standard Deviation.
- Raff Regression.
- Standard Error.
Contents
Inserting Regression Channel
- Select one of three ways to insert the Regression Channel:
- The cursor will change to the Regression channel .
- In the Chart Area click where the Regression Channel is to begin.
- Then keeping the left mouse button pressed move the pointer left or right to position the Regression Channel.
- Release the button.
Moving Regression Channel
To move a Regression Channel without changing its period length:
- Point the cursor at the Regression Channel that is to be moved.
- The cursor Pointer will change into Hand .
- Then keeping the left mouse button pressed drag the drawing tool to the desired position.
- Release the button.
Reshaping Regression Channel
To reshape a Regression Channel (change its length):
- Point the cursor at the Regression Channel that is to be reshaped.
- The cursor Pointer will change into Hand .
- Left-click the Regression Channel and 2 small squares will appear at both ends of the regression line.
- Drag one of these squares till the drawing tool becomes of the desired shape. Keep in mind that the Regression Channel will dynamically calculate the regression.
- Release the button.
Formatting Regression Channel
In MultiCharts one can change the settings of the Regression Channel. All the changes are performed in the Format Regression Channel window.
Each instance of a Regression channel has its own Format window. The number (if there are 2 or more Regression channels in the same Chart Window) are shown in the titlebar of each Format Regression Channel window.
One can change the settings of a Regression Channel: the color, style and weight of the Regression, Upper Channel and Lower Channel lines. It is possible to extend the Regression Channel to the left or/and to the right. One can choose to show or not the labels and select their font, its style and size, and the character set. It is possible to apply the strikeout or underline effects. If shown the labels can be displayed to the left or to the right of the Upper Channel and Lower Channel lines. One can also select one of 4 calculation types available to compute the Regression Channel and the price types to compute the regression line. It is also possible to change the time coordinates of the Regression Channel.
Setting Style
- Access the Format Regression Channel window.
- To access the Format Regression Channel window:
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then double-click.
- Or
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then right-click.
- Select Format 'Regression Channel'… from the shortcut menu.
- Or
- In the Format Objects window select the Drawings tab.
- Select the Regression channel that is to be formatted and press the Format… button.
- To access the Format Regression Channel window:
- Select the Data tab.
- To display or hide any elements of the Regression channel check or uncheck the Regression, Upper Channel or Lower Channel check boxes.
- In the Color column, using the drop-down lists, select the desired colors of the preset 40 colors for the Regression, Upper Channel or Lower Channel lines or click the Others… button to select the custom colors.
- In the Style column, using the drop-down lists, select the desired styles for the Regression, Upper Channel or Lower Channel lines.
- In the Weight column, using the drop-down lists, select the desired weights for the Regression, Upper Channel or Lower Channel lines.
- Check the Use as Default check box to use these settings as the default settings when creating other Regression Channels.
- Click OK.
Extending Regression Channel to Left or Right
- Access the Format Regression Channel window.
- To access the Format Regression Channel window:
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then double-click.
- Or
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then right-click.
- Select Format 'Regression Channel'… from the shortcut menu.
- Or
- In the Format Objects window select the Drawings tab.
- Select the Regression channel that is to be formatted and press the Format… button. 2. Select the Data tab.
- To access the Format Regression Channel window:
- In the Extend section check the Left or/and Right check boxes to extend the Regression channel to the left or/and right.
- Check the Use as Default check box to use these settings as the default settings when creating other Regression Channels.
- Click OK.
Setting Labels
- Access the Format Regression Channel window.
- To access the Format Regression Channel window:
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then double-click.
- Or
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then right-click.
- Select Format 'Regression Channel'… from the shortcut menu.
- Or
- In the Format Objects window select the Drawings tab.
- Select the Regression channel that is to be formatted and press the Format… button. 2. Select the Labels tab.
- To access the Format Regression Channel window:
- Check or uncheck the Show Labels check box to display or hide the labels.
- Enter the desired font in the Font field or select it from the Font list.
- Enter the desired font style in the Font Style field or select it from the Font Style list.
- Enter the desired font size in the Size field or select it from the Size list.
- In the Effects group check or uncheck the Strikeout or/and Underline check boxes to display the labels struck out or/and underlined.
- From the Character Set drop-down list select the desired character set.
- From the Align drop-down list select the desired type of the labels' alignment.
- Check the Use as Default check box to use these settings as the default settings when creating other Regression Channels.
- Click OK.
Setting Calculation Type
- Access the Format Regression Channel window.
- To access the Format Regression Channel window:
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then double-click.
- Or
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then right-click.
- Select Format 'Regression Channel'… from the shortcut menu.
- Or
- In the Format Objects window select the Drawings tab.
- Select the Regression channel that is to be formatted and press the Format… button.
- To access the Format Regression Channel window:
- Select the Properties tab.
- In the Regression Line section, using the Based on drop-down list, select the price on which the regression line is based.
- In the Calculation section select the desired calculation type. There are 4 calculation types:
- Segment High/Low
- Raff Regression
- Standard Deviation
- Note. Using this type one should specify the number of standard deviations to plot the Upper and Lower Channel lines.
- Standard Error
- Note. Using this type one should specify the number of standard errors to plot the Upper and Lower Channel lines.
- Check the Use as Default check box to use these settings as the default settings when creating other Regression Channels.
- Click OK.
Setting Coordinates Precisely
- Access the Format Regression Channel window.
- To access the Format Regression Channel window:
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then double-click.
- Or
- Drag the cursor to the Regression channel that is to be formatted.
- The cursor Pointer will change into Hand , then right-click.
- Select Format 'Regression Channel'… from the shortcut menu.
- Or
- In the Format Objects window select the Drawings tab.
- Select the Regression channel that is to be formatted and press the Format… button.
- To access the Format Regression Channel window:
- Select the Properties tab.
- In the Coordinates section enter the desired time coordinates in the Start Date and End Date fields or use the drop-down calendar.
- Check the Use as Default check box to use these settings as the default settings when creating other Regression Channels.
- Click OK.