The Time Series Forecast uses Linear Regression to calculate a best fit line over a designated time period; this line is then plotted forward a user-defined time period.
The chart below of the mini-Dow Futures contract shows the Time Series Forecast indicator:
The chart above illustrates how the Time Series Forecast line has been plotted forward (in the example above, 7 days).
Generally, traders might expect price to return back to the Time Series Forecast line when prices have strayed.
Therefore, a vague potential buy signal could occur when price is below the line and a potential sell signal could occur when price is far above the line.
However, how far price needs to vary from the line is very subjective.
A similar and arguably superior technical indicator, is the Linear Regression Curve (see: Linear Regression Curve).
How to Start Trading
If you are interested in trading using technical analysis, have a look at our reviews of these regulated brokers available in to learn which charting & analysis tools they offer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.0%-89.0% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
See our other option strategy guides or learn more about technical analysis indicators, concepts, and strategies including Momentum, Elliot Waves, Market Thrust, Moving Averages, and Fibonacci Patterns.