The NADARAYA WATSON ENVELOPE -Lux Algo Repaints NT8 Indicator for NinjaTrader8 is a technical analysis tool used in trading to estimate a smoothed price curve based on kernel regression. It is an extension of the Nadaraya-Watson estimator, which is a non-parametric regression technique. The envelope forms upper and lower bands around the price, helping traders identify potential support and resistance levels.

Key Features:

• Kernel Regression: The Nadaraya-Watson estimator uses kernel functions to smooth price data, giving a more accurate reflection of price trends compared to simple moving averages.
• Upper and Lower Envelopes: The bands are calculated as deviations from the smoothed price curve, similar to how Bollinger Bands work.
• Trend Identification: The envelope helps in identifying the general trend of the market and potential reversal points when the price interacts with the bands.

Use Case:

• Traders can use the Nadaraya-Watson Envelope to spot price extremes and overbought or oversold conditions, as well as to set dynamic support and resistance levels.
• A good use is on the Renko charts