R – Squared indicato

values close to 1.0 show perfect relation
values close to 0.0 show poor relation

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To determine if the trend is statistically significant for a given x-period linear regression line,
plot the r-squared indicator and refer to the following table. This table shows the values of
r-squared required for a 95% confidence level at various time periods. If the r-squared value
is less than the critical values shown, you should assume that prices show no statistically
significant trend.
Number ofPeriods r-squaredCritical Value(95%confidence)
5 0.77
10 0.40
14 0.27
20 0.20
25 0.16
30 0.13
50 0.08
60 0.06
120 0.03
You may even consider opening a short-term position opposite the prevailing trend when you
observe r-squared rounding off at extreme levels. Sebagai contoh, if the slope is positive and
r-squared is above 0.80 and begins to turn down, you may consider selling or opening a short position.
There are numerous ways to use the linear regression outputs of r-squared and Slope in trading
sistem. For more detailed coverage, refer to the book The New Technical Trader by Tushar Chande
and Stanley Kroll.