Linear Regression Line Indicator MT4 | MT5

The LRL indicator is a statistical tool that calculates the best-fit straight line through a price series based on a specific period. It is similar to a moving average but is based on regression analysis, making it more responsive to price changes. 

Furthermore, by applying this indicator on the MT chart, it displays a line that changes color depending on market direction. If it is colored orange, that means the trend is bearish, and if green, means the trend is bullish. That helps traders determine buy and sell signals based on the trend-following strategy and anticipate reversal points.

• Trend following strategy:

- During an uptrend, when the price rebounds from the green line (acts as a support), it signals a long opportunity.

- During a downtrend, when the price rebounds from the orange line (acts as a resistance), it signals a short opportunity.

• Potential reversal: 

For this strategy, traders should use two linear regression lines with different periods (like 25 and 50).

- If the long-term trend is bullish but the short-term trend turns bearish, a selling opportunity arises at their crossover. A confirmed bearish reversal occurs if the price breaks below the last support level of the uptrend.

- If the long-term trend is bearish but the short-term trend indicates bullish momentum, a buying opportunity arises at their crossover. A confirmed bullish reversal appears if the price rises above the last resistance level of the downtrend.

The LRL indicator is best used with other technical analysis indicators, such as BB, RSI, or MACD to avoid false signals, especially for trend reversal strategies.

* For the first trading example on the MetaTrader 4, by applying two linear regression lines with different periods (50, 100), identified a bearish trend for the long-term period and a bullish trend for the short period. When the crossover happens between these two, it signals a buying opportunity. 

If, in the next hours, the price breaks above the last resistance of the main trend, it signals a bullish continuation and a strong long opportunity for the CHFJPY pair.

* For the second trading example on the MetaTrader 5, the Linear Regression Line indicator displays two different colored lines, a green one indicates a bullish trend based on the past 100-4H-candles, and an orange line signals a bearish trend based on 25-period. The crossover between these two signals a selling opportunity.

In the upcoming hours, if the price falls below the last support level of the main trend, it signals a bearish continuation and a strong short opportunity for the EURUSD pair.