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Standard Error Band (Lower) Indicator

The standard error bands, developed by Jon Anderson of Equis International, are a set of bands that attempt to show the trend and the volatility around the trend.  Three plots are produced by this indicator.  The middle plot is the ending value of an x-period linear regression line.  The upper plot, the upper standard error band, is the result of adding two standard errors to the ending value of the regression line.  The lower plot, the lower standard error band, is a result of subtracting two standard errors from the end value of the linear regression line.  Jon Anderson notes the following:

Tight bands are an indication of a strong trend.  Prices tend to bounce between the bands when the bands are wide.  Tight bands followed by a widening of the bands may indicate the exhaustion of a trend and a possible reversal.

See Also

Standard Error Band (Lower) Developer Help

Standard Error Band (Upper)