Standard Error Bands indicator - Smoothed linear regression line: 21-period linear regression curve smoothed by a three-period simple moving average. Upper channel line - linear regression line plus 2 standard errors. Lower channel line is a linear regression line minus 2 standard errors.
The indicator was described by John Andersen in "Stock and Commodities" magazine in September 1996.
It has four inputs:
Regression period - linear regression period
Smoothing period
Multiplier - standard deviation ratio
Applied price
Calculation:
Central = SMA(LReg,Smoothing period)
Top = Central + Multiplier * Deviation
Bottom = Central - Multiplier * Deviation
where:
Deviation = StdDev(LReg,Smoothing period)
LReg - linear regression at 'Applied price' with the 'Regression period' calculation period