Linear Regression Intercept (LRI) Indicator
The Trend's Starting Point – Your Hidden Fair-Value Anchor
While everyone obsesses over slope and angle, the Linear Regression Intercept (LRI) quietly reveals where the best-fit trend line would have started – the theoretical 'fair value' at the beginning of your look-back window. It's the y-intercept (b) in the classic y = mx + b equation, giving you a rolling baseline price that reflects the current trend's origin. Think of it as the market's memory anchor: even as price races ahead, LRI shows where the move 'began' in statistical terms. Subtle but powerful for spotting hidden strength, mean-reversion levels, or relative performance.
The Math – Where the Line Begins
Straight from the regression equation:
- Fit least-squares line over N bars: price = slope × bar_index + intercept.
- LRI is that intercept (b) – the theoretical price when bar_index = 0 (start of window).
- Updates each bar as oldest price drops and new one joins.
It's not a moving average of past prices – it's where the current trend would have crossed the y-axis if extended backward.
What the Intercept Is Really Saying
Key interpretations:
- Rising LRI: Base fair value climbing – underlying bullish pressure building.
- Falling LRI: Base value eroding – hidden bearish drag even if price looks flat.
- Price far above rising LRI: Strong momentum – stretched but justified.
- Price near or below rising LRI: Potential mean-reversion pullback zone.
Great for comparing assets: higher/rising LRI in a sector often flags stealth leaders.
Smart Pairings – Making LRI Shine
Supercharge it with:
- Slope/Angle: Direction + origin = full trend picture.
- Bollinger or ATR bands around LRI: Dynamic channel using intercept as centerline.
- Volume: Rising LRI on strong volume = real accumulation.
- RSI/CCI: Overbought/oversold relative to LRI baseline for better mean-reversion timing.
Plot LRI ± k×ATR for custom volatility channels – adaptive support/resistance.
Battle-Tested Strategies
Practical plays:
- LRI Pullback Entry: Rising LRI confirms uptrend → buy dips near/toward intercept → stop below LRI + buffer.
- Intercept Divergence: Price flat/high but LRI falling → weakening trend, prep exits/shorts.
- Sector Heatmap: Rank tickers by LRI level and rise rate → spot relative strength leaders early.
- Baseline Fade: Price far from LRI in flat-slope regime → mean-reversion trade toward intercept.
Strengths and the Usual Caveats
The Wins
- Unique baseline view – reveals trend origin and hidden momentum.
- Excellent for relative strength and mean-reversion anchoring.
- Pairs beautifully with slope, channels, and oscillators.
Limitations
- Not standalone – needs slope for direction.
- Sensitive to N choice – short = twitchy, long = delayed.
- Outliers in window can skew intercept temporarily.
Your LRI Setup Checklist
- Choose N matching timeframe and asset volatility.
- Plot alongside slope and price for full context.
- Test pullback and divergence rules on historical data.
- Add volume/momentum filters for higher conviction.
- Use for multi-asset scans – rising LRI often flags quiet winners.
Key Takeaways
LRI is the y-intercept – the trend's theoretical starting price in the current window.
Rising intercept = building base strength; falling = erosion.
Perfect anchor for pullbacks, relative analysis, and custom channels.
Combine with slope for direction and volatility bands for levels.
Subtle but insightful – let LRI reveal the market's memory and hidden momentum. Stay anchored and trade wise!
Linear Regression Intercept (LRI) Indicator
The Trend's Starting Point – Your Hidden Fair-Value Anchor
While everyone obsesses over slope and angle, the Linear Regression Intercept (LRI) quietly reveals where the best-fit trend line would have started – the theoretical 'fair value' at the beginning of your look-back window. It's the y-intercept (b) in the classic y = mx + b equation, giving you a rolling baseline price that reflects the current trend's origin. Think of it as the market's memory anchor: even as price races ahead, LRI shows where the move 'began' in statistical terms. Subtle but powerful for spotting hidden strength, mean-reversion levels, or relative performance.
Table of Contents
The Math – Where the Line Begins
Straight from the regression equation:
- Fit least-squares line over N bars: price = slope × bar_index + intercept.
- LRI is that intercept (b) – the theoretical price when bar_index = 0 (start of window).
- Updates each bar as oldest price drops and new one joins.
It's not a moving average of past prices – it's where the current trend would have crossed the y-axis if extended backward.
What the Intercept Is Really Saying
Key interpretations:
- Rising LRI: Base fair value climbing – underlying bullish pressure building.
- Falling LRI: Base value eroding – hidden bearish drag even if price looks flat.
- Price far above rising LRI: Strong momentum – stretched but justified.
- Price near or below rising LRI: Potential mean-reversion pullback zone.
Great for comparing assets: higher/rising LRI in a sector often flags stealth leaders.
Smart Pairings – Making LRI Shine
Supercharge it with:
- Slope/Angle: Direction + origin = full trend picture.
- Bollinger or ATR bands around LRI: Dynamic channel using intercept as centerline.
- Volume: Rising LRI on strong volume = real accumulation.
- RSI/CCI: Overbought/oversold relative to LRI baseline for better mean-reversion timing.
Plot LRI ± k×ATR for custom volatility channels – adaptive support/resistance.
Battle-Tested Strategies
Practical plays:
- LRI Pullback Entry: Rising LRI confirms uptrend → buy dips near/toward intercept → stop below LRI + buffer.
- Intercept Divergence: Price flat/high but LRI falling → weakening trend, prep exits/shorts.
- Sector Heatmap: Rank tickers by LRI level and rise rate → spot relative strength leaders early.
- Baseline Fade: Price far from LRI in flat-slope regime → mean-reversion trade toward intercept.
Strengths and the Usual Caveats
The Wins
- Unique baseline view – reveals trend origin and hidden momentum.
- Excellent for relative strength and mean-reversion anchoring.
- Pairs beautifully with slope, channels, and oscillators.
Limitations
- Not standalone – needs slope for direction.
- Sensitive to N choice – short = twitchy, long = delayed.
- Outliers in window can skew intercept temporarily.
Your LRI Setup Checklist
- Choose N matching timeframe and asset volatility.
- Plot alongside slope and price for full context.
- Test pullback and divergence rules on historical data.
- Add volume/momentum filters for higher conviction.
- Use for multi-asset scans – rising LRI often flags quiet winners.
Key Takeaways
LRI is the y-intercept – the trend's theoretical starting price in the current window.
Rising intercept = building base strength; falling = erosion.
Perfect anchor for pullbacks, relative analysis, and custom channels.
Combine with slope for direction and volatility bands for levels.
Subtle but insightful – let LRI reveal the market's memory and hidden momentum. Stay anchored and trade wise!
Related Terms
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