A technical indicator that plots the change in the regression lines normalized slope that attempts to reflect trend strength.
The Linear Regression Acceleration indicator looks at the current period’s regression line’s normalized slope. Then using the difference from its its normalized slope from the previous bar or period, the normalized acceleration value is then plotted for each bar “oscillating” around 0. The Linear Regression Acceleration indicator calculates the change in normalized slope of the regression line from one bar to the next for each bar loaded in the chart. (See the Linear Regression Slope indicator for additional details about regression slope)
If the normalized acceleration is 0.15, then the regression line’s normalized slope is rising at a rate of 0.55 per bar. Similarly, a normalized slope of -0.15 would indicate that the regression line’s normalized slope is declining at the rate o 0.15per bar. For example, if the current bar’s normalized slope value is 0.25 and the previous bar’s normalized slope value is 0.21, then the normalized acceleration of the current bar would be calculated as 0.25 – 0.21 = 0.04.
It should be noted that a positive acceleration value does not equate to a positive slope value but merely an increase in slope, which could be negative. A negative acceleration value does not equate to a negative slope value but merely a decrease in slope, which could be positive.
The Linear Regression Acceleration indicator on a Daily chart of USD/ZAR 4/18/2011
Source: VT Trader
