Best Fit Linear Regression with StdDev Bands

Best Fit Linear Regression with Standard Deviation Bands​

The Best Fit Linear Regression with StdDev Bands is a custom TradingView indicator designed to analyze price trends and volatility over a specified number of bars. It plots a linear regression line representing the best fit for the selected price data, accompanied by optional standard deviation bands to visualize price dispersion.​

📈 Key Features
Linear Regression Line: Calculates the best-fit line over a user-defined number of bars, providing a clear visualization of the prevailing price trend.​
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Standard Deviation Bands: Optional upper and lower bands set at a multiple of the standard deviation from the regression line, indicating potential support and resistance levels.​

Price Source Selection: Choose between using the closing price or the midpoint (average of high and low) for calculations.​

Weighting Options: Apply True Range weighting to emphasize periods of higher volatility in the regression calculation.​

Trend Strength Indicator: Displays a normalized strength value between -1 and 1, indicating the direction and magnitude of the trend.​

Customizable Appearance: Adjust line color, width, label position, and background color to suit your preferences.​

Extendable Lines: Option to extend the regression and standard deviation lines beyond the visible bars for projection purposes.​

⚙️ Input Parameters
Bars to Analyze: Number of bars to include in the regression calculation (default: 100).​

Price Value: Select "Close" or "Midpoint" as the data source for calculations.​

Weighting Method: Choose between "None" or "True Range" weighting.​

Line Color & Width: Customize the color and thickness of the regression line.​

Label Position: Place the informational label at the start, center, or end of the regression line.​

Label Background Color: Set the background color for the informational label.​

Extend Line Beyond Visible Bars: Option to project the regression line into future bars.​

Show Standard Deviation Bands: Toggle the visibility of the standard deviation bands.​

Standard Deviation Multiplier: Set the multiplier for the standard deviation bands (default: 1.0).​

StdDev Bands Color: Customize the color and transparency of the standard deviation bands.​

🧮 How It Works
Data Collection: Gathers price data based on the selected source (Close or Midpoint) over the specified number of bars.​

Weighting (Optional): Applies True Range weighting if selected, giving more importance to bars with higher volatility.​

Regression Calculation: Computes the slope and intercept of the best-fit line using the least squares method.​

Standard Deviation: Calculates the standard deviation of the price data from the regression line to determine the dispersion.​

Plotting: Draws the regression line and, if enabled, the upper and lower standard deviation bands.​

Labeling: Displays a label indicating the trend direction (Bullish, Bearish, or Neutral), strength percentage, and standard deviation value.​

📊 Interpretation
Trend Direction: The slope of the regression line indicates the trend direction.​

Trend Strength: The normalized strength value provides insight into the magnitude of the trend.​

Price Position: Prices near or beyond the standard deviation bands may indicate overbought or oversold conditions.​
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🛠️ Use Cases
Trend Analysis: Identify and confirm the direction and strength of market trends.​

Volatility Assessment: Gauge market volatility through the width of the standard deviation bands.​

Support and Resistance: Use the standard deviation bands to identify potential support and resistance levels.​

Trade Timing: Assist in determining optimal entry and exit points based on price interaction with the regression line and bands.​

This indicator is particularly useful for traders seeking a statistical approach to trend analysis, offering customizable options to tailor the tool to various trading strategies and preferences.