The operation of this indicator is based on the interaction of two filters.
The first filter is the well – known simple moving average. With its help, linear price movements are highlighted and minor price fluctuations are smoothed out.
The second filter is the moving median. This filter is non-linear. It allows you to suppress noise and filter out single outliers in the price movement.
Based on the difference between these filters, a predictive filter is built, which is implemented in this indicator.
The indicator is trained during operation, so it is very sensitive to history. So, if there are few bars displayed on the chart, then there may be situations when there is no forecast. This situation is shown in the first figure. If there are too many bars, there may be a slight delay when the indicator starts.
Filter level-a parameter that allows you to configure the operation of the indicator. The value is set between 0 and 255. You can use it to select the number of bars that will be processed by the indicator.
Since the number of bars must be strictly odd, their number is calculated using the formula Filter level * 2 1.
With Filter level = 0, we get a “trustful” averager and a repeater of the previous values. When you increase this parameter, the number of factors taken into account increases, which allows you to track more global price movements. In general, this parameter should be selected based on the volatility of the currency pair, the timeframe and your own preferences.