UK Accounting Glossary
The Breakout Standard Regression Channel is a special case of Linear Regression Channels; the upper and lower lines are spaced by a specified number of standard deviations above and below the middle linear regression baseline channel.
The Breakout Standard Regression Channel is started using the first ‘n’ points in a chart to construct a baseline channel. The baseline channel is extended until the price breaks out of the channel and then a new channel computation begins. The Breakout Standard Regression Channel computation requires two parameters. The first parameter is the time period for the least-squares fit and the second parameter is the number of standard deviations above and below the fit line to plot.
Linear Regression Channels are a means for computing a line which forms the best fit to a given set of data points and two parallel lines above and below the mean line which provide resistance and support respectively. Multiple regression channels are drawn because the high or low price may break the trend of the previous regression channel over the course of time.
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This glossary post was last updated: 23rd March 2020.