Z-Score: a key measure of our analysis

Simply put, the Z-Score measures how many standard deviations a certain reading is above (or below) a computed trend. On the price chart above we have highlighted the 3 most important levels from a technical perspective:

Z-Score = 0 : the white trend line that defines the middle of the technical price channel;

Z-Score +1 : the upper orange trendline, that often signals Profit Taking when breached;

Z-Score -1 : the lower orange trendline, that is often used as a Stop-Loss when breached;

The basic concept of a deviation from a trend, expressed in a number of Standard Deviations (Z-Score) is a common feature of many financial models. You will find this measure again and again throughout our platform, in many forms, including in studies of fundamental data and relative measurements. Due to its wide usage, it is very important that you become familiar with this metric.