Polynomial Regression Extrapolation
By LuxAlgoJun 30, 2022
Polynomial Regression Extrapolation is an indicator on Vela, our next-generation charting platform, written in Pine Script®.
Polynomial Regression Extrapolation fits a polynomial curve of user-defined degree to recent prices and extends the result into the future, turning a statistical fit into a visible forecast on the chart. Degree 1 recovers the familiar straight regression line; higher degrees let the curve bend with accelerating trends and hint at where they might turn.
How to Trade the Polynomial Regression Extrapolation?
- Degree 1: a straight line, the cleanest read on linear trend direction.
- Degree 2: a parabolic fit suited to steadily accelerating moves.
- Higher degrees (such as 6): capture intricate variation and can flag potential turning points. Validate these with caution before acting.
- Extrapolated segment: the forward portion of the curve is the model's projection; watch how price behaves against it rather than trading it blindly.
As a rule, lower degrees describe the broad trend while higher degrees map detail at the cost of noise. Going beyond degree 3 usually adds more of the latter than the former. The fitted curve can also serve as a reference for support or resistance within the trend it describes.
Polynomial Regression Extrapolation Settings
- Length: how many recent price observations feed the fit.
- Extrapolate: the forecast horizon, how far forward the curve is projected.
- Polynomial Degree (default 3, from 0 to 8): the polynomial degree, the central trade-off between smoothness and detail.
- Src: the price source being modeled.
- Lock Forecast: freezes the fit so the curve extends to the most recent bar without re-fitting to new prices.
Frequently Asked Questions
Free to use
Run it on Vela. Go further with a paid plan.
- Up to 500 Custom Alerts, with webhook automation
- Up to 10× the chart history of Free
- Orderflow lookback up to full history
- More Quant usage to customize it, plus extra usage when you need it
- Futures data alongside crypto, stocks, forex and commodities
Also works on
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