Standard deviation channel

What the numbers mean

The bar count is the regression window; the deviation multiplier sets the channel width. It is the same construction as the linear regression channel, and the two names are used interchangeably on many platforms.

• 100 bars — the regression window
• 2 deviations — the channel width
• 1 deviation — an inner channel some traders add for partial targets

How it is used

Used to see whether price is rich or cheap relative to its own trend line, and to spot when a trend's slope has broken rather than just its level.

• Price in the upper third of the channel → rich relative to its own trend
• A break outside the channel → the trend's slope, not just its level, has changed

How it relates to everything else

The same construction as the linear regression channel and read identically — both fit a line and offset it by deviations. Its close relative, standard error bands, uses a different measure that behaves almost oppositely: narrow there means a well-defined trend, narrow here means quiet conditions.

• Same tool as the linear regression channel under another name
• Not the same as standard error bands, despite the similar label
• Both slope and width refit each bar, so the past is redrawn

What to watch for

Both the slope and the width re-fit every bar, so the channel that looks obvious on today's chart may not have existed a month ago.