A Daily Swing Trade

The Standard Deviation Channel is two lines plotted parallel to the Linear Regression Trendline. These lines are distanced by n number of standard deviations above and below the LRT.

Over time, prices generally move from one extreme to another. As market participants become overly optimistic, prices are driven up at an unsustainable rate. Likewise, when market participants are overly pessimistic, prices move down at an unsustainable rate.

Given this, markets tend to have an equilibrium pricing point. While the Linear Regression Trendline can help determine where such a point lies, it is the Standard Deviation Channel that is helpful in determining where the extremes fall...