Nadaraya Watson Envelope by mh

This indicator builds upon the previously posted Nadaraya-Watson Estimator. Here we have created an envelope indicator based on kernel smoothing with integrated alerts from crosses between the price and envelope extremities. Unlike the Nadaraya-Watson Estimator, this indicator follows a contrarian methodology.

• Window Size: Determines the number of recent price observations to be used to fit the Nadaraya-Watson Estimator.
  
• Bandwidth: Controls the degree of smoothness of the envelopes , with higher values returning smoother results.
  
• Mult: Controls the envelope width.
  
• Src: Input source of the indicator.
  

Usage

This tool outlines extremes made by the prices within the selected window size. This is achieved by estimating the underlying trend in the price using kernel smoothing, calculating the mean absolute deviations from it, and adding/subtracting it from the estimated underlying trend.

Before purchasing any EA, please conduct a backtest, as its effectiveness can fluctuate based on factors like market conditions, volatility, and different trading strategies. While some traders may find success with it, others may not experience the same results. It’s essential to take your own risks.