Draw regression channel

PC Draw regression channel

This article was :

published

updated

On MetaTrader4 (MT4) / MetaTrader5 (MT5), you can draw the linear regression channel based on the ideas of statistics and linear regression. It is made up of 3 lines: the linear regression line, and 2 lines on top and bottom. The line above represents the resistance line and the bottom line represents the support line.

Here we'll take a look at how to draw and set up the linear regression channel in MT4/MT5.

Switch between MT4/MT5 tabs to check the steps for each.

Step 1

Click "Insert" in the menu. Hover the pointer over "Channels" and select "Linear Regression".

In MT4, 5 types of channels are available, including the Andrews' Pitchfork, which is on the "Insert" menu.

Fibonacci

Fibonacci channel uses the trendline and creates parallel channel lines using the Fibonacci ratio.
Linear regression

Draws a center line (regression line) using the close price of each candle, and then draws equally spaced two parallel lines above and below it. The parallel lines pass through the close price farthest from the center line.
Equidistant channel

Draws two parallel lines. Each line can be moved separately while keeping them parallel.

Standard deviation

Draws a center line (regression line) using the close price of each candle, and then draws two parallel lines at a distance of standard deviation from the center line.
Andrews' Pitchfork

Three parallel lines are drawn using three points: the starting point of the trend and the high and low just after the trend.

Step 2

Click the starting point on the chart and drag it to the end point to create the linear regression channel.

Draw linear regression channel on the chart

Step 3

If you want to adjust the position of linear regression channel, make sure the white dots are being displayed on the linear regression channel and move each dot as necessary. If you cannot see the white dots, double-click near the linear regression line to display the white dots.

Adjust the linear regression channel position

Number	Descriptions
1	Change the starting point of the linear regression channel.
2	Change the position of the linear regression channel.
3	Change the end point of the linear regression channel.

Values displayed during drawing a linear regression channel

Values displayed when dragging indicate the numbers of candlesticks and points from the starting point to the end point.

Step 4

To modify the regression channel settings, right-click near the linear regression line and select "Regression Channel properties...".

Modify the linear regression channel settings

Step 5

On the "Properties" window, edit the parameters in the "Common", "Parameters", and "Visualization" tabs and click "OK".

"Common" tab

Number	Item name	Descriptions
1	Name	Name the linear regression channel.
2	Description	The description can be displayed on the chart when hovering the pointer over the linear regression line.
3	Style	Set the color, line type, and line thickness for the linear regression channel.
4	Draw object as background	Check this box if you want to place the linear regression channel behind the chart.

"Parameters" tab

Number	Item name	Descriptions
1	Starting point position	Specify the starting point position by date and time.
2	End point position	Specify the end point position by date and time.
3	Ray	Check this box to extend the linear regression channel to the right.

Use "Ray" for future analysis

If you check the "Ray" box, the line will be extended beyond its end point. This makes it easier to analyze, as the line will be extended into the future, based on the price movement between the starting point and the end point at a certain point in time.

"Visualization" tab

On the "Visualization" tab, you can specify the timeframes to use the linear regression channel with.

Step 1

Click "Insert" in the menu. Hover the pointer over "Objects" > "Channels" and select "Regression Channel".

Hover the pointer over Objects and select Regression Channel

On MT5, five types of channels can be drawn including the Fibonacci channel in the "Fibonacci" menu.

Equidistant channel

Draws two parallel lines. Each line can be moved separately while keeping them parallel.
Standard deviation

Draws a center line (regression line) using the close price of each candle, and then draws two parallel lines at a distance of standard deviation from the center line.
Linear regression

Draws a center line (regression line) using the close price of each candle, and then draws equally spaced two parallel lines above and below it. The parallel lines pass through the close price farthest from the center line.

Andrews' Pitchfork

Three parallel lines are drawn using three points: the starting point of the trend and the high and low just after the trend.
Fibonacci

Fibonacci channel uses the trendline and creates parallel channel lines using the Fibonacci ratio.

Step 2

Click the starting point on the chart and drag it to the end point to create the regression channel.

Step 3

If you want to adjust the position of regression channel, make sure the white dots are being displayed on the regression channel and move each dot as necessary. If you cannot see the white dots, double-click near the regression channel to display the white dots.

Number	Descriptions
1	Change the starting point of the regression channel.
2	Change the position of the regression channel.
3	Change the end point of the regression channel.

Values displayed during drawing a regression channel

Values displayed when dragging indicate the numbers of candlesticks and points from the starting point to the end point.

Step 4

To modify the regression channel settings, right-click near the channel and select "Properties of (channel name)".

Step 5

On the "Properties" window, edit the parameters in the "Common", "Parameters", and "Visualization" tabs and click "OK".

"Common" tab

Number	Item name	Descriptions
1	Name	Name the regression channel.
2	Description	The description of the regression channel can be displayed on the chart. Related article: Show or hide items on chart
3	Style	Set the color, line type, and line thickness for the regression channel.
4	Draw object as background	Check this box if you want to place the regression channel behind the chart.
5	Disable selection	Check this box if you want to disable the editing of the regression channel.

"Parameters" tab

Number	Item name	Descriptions
1	Starting point position	Specify the starting point position by date and time.
2	End point position	Specify the end point position by date and time.
3	Ray/Fill	Check each box to extend the regression channel to the left and right, or fill inside the channel.

What are "Ray" and "Fill"?

Ray is a parameter that can be set on channels and other objects to extend the line beyond its end point. This makes it easier to analyze, as the line will be extended into the past and future, based on the price movement between the starting point and the end point at a certain point in time. As for "Fill", this feature fills the channel with a color to highlight its range.