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Raff
Regression Channel
Description
Developed
by Gilbert Raff, the regression channel is a line
study that plots directly on the price chart.
The Regression Channel provides a
precise quantitative way to define a price trend
and its boundaries.
The
Regression Channel is constructed by plotting two
parallel, equidistant lines above and below a
Linear Regression trendline.
The distance between the channel lines to
the regression line is the greatest distance that
any one high or low price is from the regression
line.
For
more detailed information on using the Raff
Regression Channel, we recommend the book Trading
the Regression Channel by Gilbert Raff
(available directly from Equis International).
For
information on other channel-based line studies,
see Envelopes,
Standard
Deviation Channels, Standard
Error Bands, and Standard
Error Channels.
Interpretation
Raff
Regression Channels contain price movement, with
the bottom channel line providing support and the
top channel line providing resistance.
Prices may extend outside of the channel
for a short period of time.
However, if prices remain outside the
channel for a long period of time, a reversal in
trend may be imminent. |
