Fitting a Trendline by Least Squares by Arthur A. Merrill, C.M.T.
ARTICLE SYNOPSIS ...Fitting A Trendline By Least Squares
by Arthur A. Merrill, C.M.T.
Usually, trendlines are drawn through tops or bottoms. They are also drawn through the center of
prices by a lagged moving average or by eye (Figure 1). A straight line through the center of a price
channel, if the scale is logarithmic, will give you the percentage growth or decline rate.
If the straight line is drawn by eye, it is subject to debate. This question can be resolved by a
mathematically calculated line called ""least squares"" (Figure 2). The deviations of the points from the line
are marked A, B, C, D and E in Fi...