Definition

The Linear Regression Intercept (LR-I) is a study that focuses on identifying the starting point, or y-axis intercept, of a trend line plotted through historical prices. Similar to the Linear Regression Forecast, it employs the ordinary least squares method to create a straight line that best fits the data.

The "ordinary least squares method" is a statistical approach that aims to find the straight line closest to all the data points on a chart. It essentially minimizes the "distance" between the line and each data point to offer the best representation of the trend.

In trading terms, the LR-I is essentially the point where the trend line crosses the y-axis, acting like an offset moving average that shifts along with market changes.

Suggested Trading Use

When you want to know where a particular trend begins, the LR-I is the tool for you. By keeping tabs on the y-axis intercept, you'll have a clearer understanding of the baseline value from which the stock is deviating. This can be useful for gauging relative price movements over specific periods. If the intercept starts moving up or down, that can be a sign that the overall trend is shifting in that direction.

Like its counterparts, this study is also customizable via the Field parameter, allowing you to apply it to other studies for a more nuanced view. Use the LR-I to add another layer of depth to your trading strategy.