Regression Channels

Regression Price Channel consist of Standard Deviation, Standard Error and Raff Regresion Channels. Unlike the equidistant trendline, which is drawn by you, regression price channels are created automatically depending on start and end points that you choose. Each onw of these price channels is different from each other but they share one characteristic, which is that they have 3 trendlines, and the middle one is a regression line from the start to end points that you pick.

The Standard Deviation and Standard Error Price Channels use statistical measures to determine where the upper and lower parralel trendlines will be placed. The Standard Deviation channel uses standard deviation away from the middle line to place its trendlines, while the Standard Error channel uses standard error.

How do you use these complex sounding tools? It's very easy.

Choosing Standard Deviation, Standard Error, and Regression Price Channel Tools

First, you will need to select the Price Channel tool you want from the Drawing Toolbar or from the Tool Selector Icon in the Chart Window Toolbar. The relevant icons are shown below highlighted in red on the Drawing Toolbar, with the small letters in the right hand corner of the icons signaling which tool it is; D for Standatd Deviation, E for Standard Error, and R for Raff Regression. In the Chart Window's Tool Selector Icon, the three options are written out for you; they are highlighted in blue.

 

Placing a Price Channel

Once you have selected the Price Channel drawing tool you want, click the point at which you would like the price channel, and the regression line, to start. Then drag your mouse to the end point, and voila, you have your channel. The image below is of a Standard Deviation Price Channel.

 

Moving and Editing the Price Channels

There are two ways you can manipulate the price channels after they are set.

One is to move either the starting or ending point by clicking and dragging the endpoints of the middle trendline.

The second way to manipulate the price channels is to select the channel by clicking and of its trendlines and then clicking and dragging the whole price channel. Doing this will not change distance from the beginning of the the channel to the end, but will change the slope of the regression line and its corresponding trendlines. These changes will happen on the screen as you drag the price channel to a new position.