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    • Overview
      • Why Analyze Securities?
      • Technical Analysis
      • Fundamental Analysis
      • Random Walk vs. Non-Random Walk
      • Asset Allocation and Diversification
      • John Murphy's 10 Laws of Technical Trading
      • John Murphy's "Charting Made Easy" eBook
      • Technical Analysis 101
        • TA 101 – Part 1
        • TA 101 – Part 2
        • TA 101 – Part 3
        • TA 101 – Part 4
        • TA 101 – Part 5
        • TA 101 – Part 6
        • TA 101 – Part 7
        • TA 101 – Part 8
        • TA 101 – Part 9
        • TA 101 – Part 10
        • TA 101 – Part 11
        • TA 101 – Part 12
        • TA 101 – Part 13
        • TA 101 – Part 14
        • TA 101 – Part 15
        • TA 101 – Part 16
        • TA 101 – Part 17
      • Irrational Exuberance
      • Cognitive Biases
      • Arthur Hill on Goals, Style and Strategy
      • Arthur Hill on Moving Average Crossovers
      • Multicollinearity
      • "The Trader's Journal" by Gatis Roze
        • Stage 1: Money Management
        • Stage 2: Business of Investing
        • Stage 3: The Investor Self
        • Stage 4: Market Analysis
        • Stage 5: Routines
        • Stage 6: Stalking Your Trade
        • Stage 7: Buying
        • Stage 8: Monitoring Your Investments
        • Stage 9: Selling
        • Stage 10: Re-Examine, Refine, Re-Enhance
        • Additional Reading
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      • Richard Rhodes' Trading Rules
      • Donchian Trading Guidelines
      • Why and How To Use Correlation
    • Chart Analysis
      • What Are Charts?
      • Support & Resistance
      • Trend Lines
      • Gaps and Gap Analysis
      • Introduction to Chart Patterns
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        • Broadening Top or Megaphone Top
        • Double Top Reversal
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        • Head and Shoulders Top
        • Head and Shoulders Bottom
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        • Flag, Pennant
        • Symmetrical Triangle
        • Ascending Triangle
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        • Measured Moveβ€”Bullish
        • Measured Moveβ€”Bearish
        • Cup With Handle
      • Chart Types
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        • Three Line Break Charts
        • MarketCarpets
        • Relative Rotation Graphs (RRG Charts)
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        • Introduction to Candlesticks
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          • Introduction to Point & Figure Charts
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          • P&F Price Objectives: Breakout and Reversal Method
          • P&F Price Objectives: Horizontal Counts
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    • Technical Indicators & Overlays
      • Introduction to Technical Indicators and Oscillators
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        • Alligator Indicator
        • Aroon
        • Aroon Oscillator
        • ATR Bands
        • ATR Trailing Stops
        • Average Directional Index (ADX)
        • Average True Range (ATR) and Average True Range Percent (ATRP)
        • Balance of Power (BOP)
        • Bollinger BandWidth
        • %B Indicator
        • Chaikin Money Flow (CMF)
        • Chaikin Oscillator
        • Chande Trend Meter (CTM)
        • CMB Composite Index
        • Commodity Channel Index (CCI)
        • ConnorsRSI
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        • DecisionPoint Price Momentum Oscillator (PMO)
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        • Distance From Highs
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        • Distance To Highs
        • Distance To Lows
        • Distance From Moving Average
        • Ease of Movement (EMV)
        • Force Index
        • Gopalakrishnan Range Index
        • High Low Bands
        • High Minus Low
        • Highest High Value
        • Linear Regression R2
        • Lowest Low Value
        • Mass Index
        • MACD (Moving Average Convergence/Divergence) Oscillator
        • MACD-Histogram
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        • MACD-V Histogram
        • Median Price
        • Money Flow Index (MFI)
        • Negative Volume Index (NVI)
        • On Balance Volume (OBV)
        • Percentage Price Oscillator (PPO)
        • Percentage Volume Oscillator (PVO)
        • Performance Spread
        • Price Relative/Relative Strength
        • Pring's Know Sure Thing (KST)
        • Pring's Special K
        • Rate of Change (ROC)
        • Relative Strength Index (RSI)
        • Relative Volume (RVOL)
        • RRG Relative Strength
        • StockCharts Technical Rank
        • Slope
        • Standard Deviation (Volatility)
        • Stochastic Oscillator (Fast, Slow, and Full)
        • StochRSI
        • Traffic Light
        • TRIX
        • True Range
        • True Strength Index
        • TTM Squeeze
        • Typical Price
        • Ulcer Index
        • Ultimate Oscillator
        • Vortex Indicator
        • Weighted Close
        • Williams %R
      • Technical Overlays
        • Anchored VWAP
        • Bollinger Bands
        • Chandelier Exit
        • Double Exponential Moving Average (DEMA)
        • Hull Moving Average (HMA)
        • Ichimoku Cloud
        • Kaufman's Adaptive Moving Average (KAMA)
        • Keltner Channels
        • Linear Regression Forecast
        • Linear Regression Intercept
        • Moving Averagesβ€”Simple and Exponential
        • Moving Average Ribbon
        • Moving Average Envelopes
        • Parabolic SAR
        • Pivot Points
        • Price Channels
        • Triple Exponential Moving Average (TEMA)
        • Volume-by-Price
        • Volume-Weighted Average Price (VWAP)
        • ZigZag
    • Market Indicators
      • Introduction to Market Indicators
        • Market Indicator Dictionary
      • Advance-Decline Line
      • Advance-Decline Percent
      • Advance-Decline Volume Line
      • Advance-Decline Volume Percent
      • Arms Index (TRIN)
      • Bullish Percent Index (BPI)
      • DecisionPoint Intermediate-Term Breadth Momentum Oscillator (ITBM)
      • DecisionPoint Intermediate-Term Volume Momentum Oscillator (ITVM)
      • DecisionPoint Swenlin Trading Oscillator (STO)
      • High-Low Index
      • High-Low Percent
      • McClellan Oscillator
      • McClellan Summation Index
      • Net New 52-Week Highs
      • Percent Above Moving Average
      • Pring's Bottom Fisher
      • Pring's Diffusion Indicators
      • Pring's Inflation and Deflation Indexes
      • Pring's Net New High Indicators
      • Put/Call Ratio
      • Record High Percent
      • Volatility Indices
    • Market Analysis
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      • The DecisionPoint Chart Gallery
      • DecisionPoint Rydex Asset Analysis
      • Wyckoff Analysis Articles
        • Wyckoff Market Analysis
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        • The Wyckoff Method: A Tutorial
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        • Introduction to Elliott Wave Theory
        • Identifying Elliott Wave Patterns
        • Guidelines for Applying Elliott Wave Theory
    • Trading Strategies & Models
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      • Trading Strategies
        • Bollinger Band Squeeze
        • CCI Correction
        • CVR3 VIX Market Timing
        • Faber's Sector Rotation Trading Strategy
        • Gap Trading Strategies
        • Harmonic Patterns
        • Hindenburg Omen
        • Ichimoku Cloud Trading Strategies
        • The 'Last' Stochastic Technique
        • MACD Zero-Line Crosses With Swing Points
        • Moving Average Trading Strategies
          • Finding Support and Resistance in Moving Averages
          • Guppy Multiple Moving Average: An MA Ribbon Designed to Tip the Market’s Hand
          • How To Trade Price-to-Moving Average Crossovers
          • Trading the Bounce: Finding Support and Resistance in Moving Averages
          • Trading the Death Cross
          • Trading Using the Golden Cross
          • Using the 5-8-13 EMA Crossover for Short-Term Trades
        • Moving Momentum
        • Narrow Range Day NR7
        • Percent Above 50-day SMA
        • Percent B Money Flow
        • The Pre-Holiday Effect
        • RSI(2)
        • Six-Month Cycle MACD
        • Slope Performance Trend
        • Stochastic Pop and Drop
        • Swing Charting
        • Trend Quantification and Asset Allocation
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      • StockCharts Pseudo Symbols
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On this page
  • What Is the Linear Regression R2 Indicator?
  • Charting LR-R2 in StockChartsACP

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  1. Table of Contents
  2. Technical Indicators & Overlays
  3. Technical Indicators

Linear Regression R2

PreviousHighest High ValueNextLowest Low Value

Last updated 11 months ago

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What Is the Linear Regression R2 Indicator?

If you're a trend trader, you want to trade when price is trending. If you prefer to get in and out of trades more frequently than a trend trader, you'd prefer to trade in a non-trending market.

The Linear Regression R2 (LR-R2) is a moving linear regression that plots the R-squared value of a linear regression over a specified time. It's an oscillator that moves between zero and one. When it's at zero, it indicates a lack of trend and when it's at one, it indicates a strong trend.

Charting LR-R2 in StockChartsACP

Select Linear Regression R2 from the Standard Indicators list. The indicator will be plotted in a different panel (see chart below). The Linear Regression R2 oscillator in the daily chart of the SPDR S&P 500 ETF (SPY) is at 0.49, which means there's about 50% of the price action is based on a linear relationship and a 50% chance that price action is related to events such as interest rate changes, inflation fears, or general economic fundamentals.

To change the color, style, or other indicator parameter settings for LR-R2, select the settings icon next to the indicator and choose your parameters.

Periods. The default setting is 14, but you can change it to any number of bars you wish to use to calculate LRF.

Calculated From. There are various choices hereβ€”solid, solid (thin), solid (thick), dashed, etc. Take your pick. Select the value you want to use for calculations. This can be the open, high, low, close, (H + L)/2, (H + L + C)/3, (H + L + 2C)/4, (O + H + L + C)/4;

Line Style. You have a few choices hereβ€”solid, solid (thin), solid (thick), dashed, etc. Take your pick.

Opacity. Use the slider to select the transparency of LR-R2.

Colors. You can choose the color for LR-R2 that you prefer to view on your chart.

Add Overlays. Sometimes, additional overlays can help confirm trend direction. This dropdown menu offers several overlays to choose from.

The Linear Regression Forecast indicator was overlaid on the price chart to add additional confirmation. Note that price crossed above the LRF. All three indicators confirm the start of an uptrend, which means you could potentially open a long position in SPY.

LR-R2 can be used with indicators such as the or the (RSI). The chart below adds the Fast Stochastic Oscillator in a separate panel. On the chart, you see that between April 22 and May 1, 2024 the trend strength had declined from 0.8 to 0. After that decline, the LR-R2 started rising, and the %K line of the Fast Stochastic Oscillator crossed over the %D line. In addition, the Fast Stochastic Oscillator moved into overbought territory.

Stochastic Oscillator
Relative Strength Index
Applying Linear Regression R2 in StockChartsACP.
Linear Regression R2 with Full Stochastics and LRF.
Chart of SPY with Linear Regression R2 using StockChartsACP
Chart of SPY with Linear Regression R2, Stochastics, and Linear Regression Forecast using StockChartsACP