In the financial market, commodity prices will always revolve around a linear regression trend line for a period of time, fluctuating on both sides and developing along this trend line. When the price deviates too far from the trend line during the fluctuation process, it will move closer to the trend line again.
The wave theory believes that the price trend of commodities develops in waves. No matter what stage it is at, it fluctuates along both sides of its respective return trend line within a certain period of time, and develops in the direction of the trend line. Therefore, investors can use linear regression indicators for quantitative trading.
In MT4, the mainstream market software for spot silver, you can find this line drawing analysis tool through "Insert" - "Channel" - "Linear Regression", return the mouse to the trend chart, and start at the place you want to mark. When drawing a line, you can move it left or right and adjust the distance. Release the mouse when you feel it is almost done. The drawn linear regression channel is as shown in the figure below:
The Linear Regression Channel is a custom technical indicator that uses statistical data as a basis for identifying support and resistance levels, as well as oversold or overbought price levels. A channel formed by upper and lower rails usually slopes in the direction of the trend. Silver prices usually remain within the channel, with the upper and lower rails serving as resistance and support.
The way to use the linear regression channel line is very simple. When it slopes upward, if the silver price falls below the channel lower track and forms a bullish reversal K-line combination, establish a long position and set the stop loss below the pattern. When the silver price falls below the channel track and forms a bullish reversal K-line combination, When the price hits the upper track of the channel, close the position and leave with a profit.