Description
💡 Linear Regression Channels and ZigZag Points 💡
• The linear regression channels are recalculated and reset each time the price moves beyond the expected boundaries (bands), ensuring the measurement remains up-to-date with the market’s real trend.
• The marked points (circles) represent extremes (highs and lows) that serve as the basis for drawing the ZigZag and determining where the channels are calculated from.
• This dynamic approach allows for better visualization of potential trend changes, as well as areas of overextension or overselling where the price might revert toward the mean.
❓ How do the channels relate to the ZigZag and the extreme points? ❓
• Whenever a new extreme (high or low) is detected, the indicator not only plots a circle and the ZigZag line connecting that point to the previous one, but also readjusts the potential linear regression channel being drawn from that last extreme.
• If, during the following bars, the price remains within the bands, the channel stays active and extends to the current bar.
• If at any point the price breaks those bands, the indicator “assumes” the channel has been invalidated and starts a new one from the bar where the break occurred.
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Summary
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