Linear Regression Indicator Explained

The Linear Regression indicator fits a least-squares straight line through the last N closes and plots the line's endpoint each bar. It's the statistician's moving average: instead of averaging the past, it models the trend and reports where the model says price should be now.

How It Works

• A least-squares fit minimizes distance to all closes in the window.
• The endpoint value leads a same-length SMA because the fit extrapolates the trend within the window.
• Deviation of actual price from the regression value measures short-term stretch.

How to Trade It

Use it as a low-lag baseline (price above a rising regression line = trend intact), or trade the gap: price far above the regression value tends to revert toward it. Combined with its own Slope, you get direction and steepness as separate conditions.

Building It in Setup.Cash

Add Linear Regression in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. The TOS StdDev All indicator draws the full regression channel. For the full category overview, see the advanced trend library guide.

Trend tools reward patience: pick one, pair it with a volatility or regime filter, and backtest before trading it live.