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Linear Regression Indicator (LRI)
The basis of the Linear Regression Indicator is a price trend docked into a certain period. The method of linear regress calculation is the least squares. The least square lets drawing a trendline in the way that the root-mean-square divergence (axis Y) of the trend points from the n price chart points is set to minimum in the certain period.
A trendline drawn with the linear regress always finishes with the LRI indicator point. Though LRI indicator resembles moving average, it has some pluses. Unlike moving average, LRI has a lower axis X latency and therefore is more reactive to price movement.
Generally LRI predicts the price for future periods according to the present price and taking into consideration past price trends. The calculation of the LRI indicator goes on the following way: a linear regression line is drawn through the defined period values and shows the current figures. A linear regression line always comes as close as possible to the defined values and corresponds a straight line.
It is impossible to set the beginning of a data series LRI while the defined period is not filled with the data.
It is similar to the Time Series Moving Average and a zero offset Time Series Forecast.
