Polynomial Regression Channel (PRC) Bands
Definition of 'Polynomial Regression Channel (PRC) Bands'
A linear regression indicator draws a straight line of best fit on a chart. The PRC indicator applies a polynomial function to the linear regression function to adapt itself to the flow of market prices. Since they are regression bands that self adjust for volatility.
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Here is a chart that was posted in our forum by trader koolblue who is an avid user of the PRC Bands:
This indicator is used to fade the direction of the market. The basic trading strategy is to buy when the price enters the lower band region or sell when the price hits the upper band. Traders will take profits at the middle band but an aggressive trader might hold out and expect the market to hit the other band.
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