OPEN-SOURCE SCRIPT
Nadaraya-Watson Regression Liquidity Sweeps [AlgoAlpha]
🟠 OVERVIEW
This script combines Nadaraya-Watson regression, momentum analysis, and liquidity level tracking into a single workflow. It measures the slope of a smoothed price regression curve, converts that slope into a normalized oscillator, and uses momentum shifts to identify areas where liquidity may be resting.
The oscillator is built from the rate of change of the Nadaraya-Watson estimate rather than price itself. This allows momentum transitions to be measured relative to the underlying regression trend. When momentum weakens after an extended move, the script records swing-based liquidity levels that can later be swept by price.
A volatility-adjusted Nadaraya-Watson band is also displayed on the chart. This provides context for trend direction, momentum strength, and potential rebound conditions around the regression value.
🟠 CONCEPTS
🟠 FEATURES
🟠 HOW TO USE
🟠 CONCLUSION
The Nadaraya-Watson Regression Liquidity Sweeps indicator combines regression-based momentum analysis, volatility-adjusted trend structure, and liquidity level tracking. By linking momentum transitions to swing-derived liquidity zones, it helps identify where liquidity may be forming and when it has been swept. This provides traders with additional context for trend analysis, pullbacks, and potential reversal areas.
This script combines Nadaraya-Watson regression, momentum analysis, and liquidity level tracking into a single workflow. It measures the slope of a smoothed price regression curve, converts that slope into a normalized oscillator, and uses momentum shifts to identify areas where liquidity may be resting.
The oscillator is built from the rate of change of the Nadaraya-Watson estimate rather than price itself. This allows momentum transitions to be measured relative to the underlying regression trend. When momentum weakens after an extended move, the script records swing-based liquidity levels that can later be swept by price.
A volatility-adjusted Nadaraya-Watson band is also displayed on the chart. This provides context for trend direction, momentum strength, and potential rebound conditions around the regression value.
🟠 CONCEPTS
- Nadaraya-Watson Regression — A kernel-based smoothing method that estimates an underlying price curve by weighting nearby historical data more heavily than distant data.
- Normalized Regression Slope — The change in the Nadaraya-Watson estimate divided by its recent standard deviation, allowing momentum strength to be compared across different market conditions.
- Liquidity Sweep Level — A horizontal level created from a swing high or swing low when momentum begins to weaken, representing an area that may later attract price.
- Oscillator Signal Line — An EMA of the normalized oscillator used to identify momentum crossovers and momentum phase changes.
- Rebound Condition — A signal generated when price moves back through the Nadaraya-Watson value while oscillator direction remains aligned with the prevailing momentum bias.
🟠 FEATURES
- Normalized Nadaraya-Watson Oscillator — Measures momentum using the slope of a smoothed regression curve.
- Liquidity Sweep Detection — Creates liquidity levels when bullish or bearish momentum begins to weaken.
- Volatility-Adjusted Regression Band — Displays a dynamic overlay around the Nadaraya-Watson estimate using smoothed ATR values.
- Momentum Weakening Signals — Marks locations where oscillator momentum begins to lose strength against the current directional bias.
- Rebound Signals — Highlights situations where price reclaims or loses the regression value while momentum remains aligned with trend direction.
🟠 HOW TO USE
- Monitor the oscillator relative to its signal line to identify momentum shifts and changes in directional bias.
- Watch for newly created liquidity levels after momentum weakening events, as these levels may become future sweep targets.
- Use sweeps of upper or lower liquidity levels to identify areas where price has taken resting liquidity.
- Look for bullish rebound signals when price reclaims the regression value while bullish momentum remains active.
- Look for bearish rebound signals when price loses the regression value while bearish momentum remains active.
- Combine oscillator direction, liquidity levels, and regression band structure to build context around trend continuation or reversal scenarios.
🟠 CONCLUSION
The Nadaraya-Watson Regression Liquidity Sweeps indicator combines regression-based momentum analysis, volatility-adjusted trend structure, and liquidity level tracking. By linking momentum transitions to swing-derived liquidity zones, it helps identify where liquidity may be forming and when it has been swept. This provides traders with additional context for trend analysis, pullbacks, and potential reversal areas.
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que cualquier republicación del código está sujeta a nuestras Normas internas.
🚨Get premium: algoalpha.io
🛜Get FREE signals: discord.gg/xCmqTVRexz
💡Tutorials: youtube.com/@AlgoAlpha
🛜Get FREE signals: discord.gg/xCmqTVRexz
💡Tutorials: youtube.com/@AlgoAlpha
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.
Script de código abierto
Fiel al espíritu de TradingView, el creador de este script lo ha convertido en código abierto, para que los traders puedan revisar y verificar su funcionalidad. ¡Enhorabuena al autor! Aunque puede utilizarlo de forma gratuita, recuerde que cualquier republicación del código está sujeta a nuestras Normas internas.
🚨Get premium: algoalpha.io
🛜Get FREE signals: discord.gg/xCmqTVRexz
💡Tutorials: youtube.com/@AlgoAlpha
🛜Get FREE signals: discord.gg/xCmqTVRexz
💡Tutorials: youtube.com/@AlgoAlpha
Exención de responsabilidad
La información y las publicaciones no constituyen, ni deben considerarse como, asesoramiento o recomendaciones financieras, de inversión, de trading u otro tipo, proporcionadas o respaldadas por TradingView. Obtenga más información en Condiciones de uso.