Indicator Extended Regression StopAndReverse written based on some popular and in my opinion a very useful programs, scripts and experts.
When you start indicator automatically detects timeframe counts two types of regression in the current timeframe and calculates the mean square deviation of prices in this range. First of all is important to us straight gold line - the first degree regression line showing the direction and the true state of the current trend in the selected timeframe. It is understood that the larger the angle with the horizontal, the stronger trend. Thus, we are able to draw some conclusions about the state of the currency pair at current prices with respect to the location of the regression line. For example, in the general case, if the beam is up, and the price is below the beam, this indicates the end of a recent small correction, and we expect a natural transition to higher rates of regression of the beam as a continuation of the trend.
At some distance from the golden line runs parallel to the support and resistance trend. They are respectively above and below the trend line. This is - the real linear thresholds, as they are built on the value of the mean square deviation is computed on the range with an appropriate factor Fibonacci.
Using the value of the mean square deviation, and the corresponding coefficients Fibonacci indicator special algorithm calculates the adaptive levels of "stop" and "stop / turn" to the current price. These levels can be interpreted as a deviation of the instantaneous limits on the time of the last section of the bar. These values \u200b\u200bare shown colored points above and / or below the price in accordance with the state of the currency pair. Points blue shades drawn below the price, lighter ones - is "stop", darker - "stop / turn". Points of red shades are drawn above the price levels and also show stops and turns. For any value at any price indicator bar always displays only two levels of instantaneous values, instead of all four. This helps to draw conclusions about the state trend. An important detail - in the true penetration of one or two levels at once stops, when the closing price of the bar beyond the appropriate level, the indicator displays the event reversal of the instantaneous values \u200b\u200b- for example, if before it was breaking resistance levels, after breaking through the light instead draws instant support levels . Thus, if you see the reverse - it is at least a short-term change of trend in the small correction.
Given a regression coefficient is calculated and displayed by the non-linear channel, which is required to predict the near future, and in addition performs the same role as the linear channel, it is a map of the actual levels of support and resistance, but dynamic and nonlinear time-varying. By default, the polynomial regression coefficient, ie 2.
Interpretation of the indicator is relatively simple:
- For example, non-linear regression channel bends and crosses the gold uptrend line from top to bottom. This is a signal of exhaustion - should expect correction or trend change. If it crosses it from the bottom up - a signal strength of a trend of increase. When all the downtrend, respectively vice versa. It is also necessary to switch to the major and minor timeframe and look at the situation there.
The intersection of the price line of support or resistance:
- If the price jumped for resisting uptrend, we should expect it to return to the channel, but it does not necessarily cover their orders. If the price jumps for support for uptrend, we should expect a strong correction, if it breaks the level of both the stop / reversal. For a more accurate understanding of the situation it is also necessary to take into account the state of the channe
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