Linear Regression Slope
Last updated
Last updated
The Linear Regression Slope (LRS) is a technical analysis indicator that measures the angle or steepness of the linear regression line applied to price data. Unlike the Linear Regression Curve, which focuses on fitting a line through price points, the slope specifically reveals the rate of price change over a defined period.
In simple terms, LRS tells traders how quickly prices are trending up or down — giving a numerical value to momentum.
The indicator calculates the slope (or gradient) of a straight line that best fits the closing prices over a specific lookback period. This line is derived using the least squares method, minimizing the distance between the line and actual price points.
A positive slope means the market is in an uptrend.
A negative slope indicates a downtrend.
A slope near zero suggests the market is moving sideways or lacking a clear trend.
🟢 LRS > 0: Bullish momentum — the higher the value, the stronger the uptrend.
🔴 LRS < 0: Bearish momentum — the more negative the value, the stronger the downtrend.
⚪ LRS ≈ 0: Weak or no momentum — price is consolidating or moving in a range.
The actual numeric value is less important than the direction and change over time.
Lookback Period: 14 is a common default, but:
Short-term traders may use 7–10 periods for faster signals.
Long-term traders might prefer 21–50 periods for smoother trends.
Timeframe: Works well on all timeframes, but daily and 4H charts are popular for swing trading.
Customization depends on your strategy and asset volatility.
Trend Confirmation Combine LRS with a trend indicator (like EMA or Ichimoku). For example, enter long trades when:
LRS > 0
Price is above a key moving average
Momentum Filter Use it as a filter to avoid sideways markets. If LRS is close to zero, skip the trade and wait for stronger momentum.
Reversal Warning A flattening or reversing slope might indicate weakening momentum — signaling a potential trend change.
Pair with Oscillators Use LRS for direction and oscillators like RSI or Stochastics for entry timing.
❌ Ignoring noise: On lower timeframes, LRS can flip quickly — use with context or smoothing.
❌ Over-relying on slope value: A positive slope doesn’t always mean price will continue to rise. Always consider broader market structure.
❌ Not adjusting settings: Default values don’t fit all assets. Test and optimize based on your trading goals.
The Linear Regression Slope is a straightforward yet powerful tool that quantifies the speed and direction of price trends. It’s especially useful for identifying early trend strength and filtering out low-momentum setups.
When combined with price action and other indicators, LRS can become a reliable ally in trend-based strategies.
