I Regression is a powerful Vertex client-side indicator used to calculate and display regression data for a specific chart.
It is used to identify sideways and trending markets using the First degree regression, and the market cycles using the second and third degree
regressions.
It has three modes of operation, configured based on the DEGREE input parameter –
Number 1 Mode is Linear Regression Mode – As the name implies, it displays three lines, the middle GREEN line which is the linear regression line, a
yellow line each above and below the middle GREEN line. The two YELLOW lines are K S T D times the standard deviation away from the middle
GREEN line. When the prices are restricted within the outside YELLOW lines, it is clearly that volatility is below K S T D number of standard
deviations.
Hence, breakout trades can be placed beyond these two YELLOW lines.
Similarly the Number 2 Mode is Parabolic Regression Mode –The Parabolic Regression Mode is the second degree regression mode using second
power filters to calculate the regression lines instead of first power (linear) regression.
Breakout trades can be placed above and below the YELLOW lines.
Similarly the Number 3 Mode is Polynomial – The Polynomial Regression Mode is the Third degree regression mode using Third power filters to
calculate the regression lines.
Breakout trades can be placed above and below the YELLOW lines.