Welles Wilder Smoothing

This is another Moving average, which is very similar to an Exponential Moving Average (EMA), but uses only a slightly different calculation.

Why should I use it?

The Welles Wilder Smoothing indicator reacts slower to the changes of the price in comparison with the Exponential moving average. It gives you the qualities of an Exponential moving average, with some what reduced sensitivity to price changes.
Because it is less sensitive, it might avoid potentially false signals the Exponential Moving average wouldn't.

How does it look like?

The Welles Wilder Smoothing looks just like a Simple Moving Average, that is, a single line on the chart that indicates the average price for each period.
Choose its color and number of periods you want to use for its calculation out of the indicator settings box.

How does it work?

Anything that you can do with a simple moving average, you can apply to the Welles Wilder Smoothing line.
Use it to define the market direction, to spot possible support and resistance levels and a possible change in the market's trend.

Example

Below is an hourly chart of EUR/USD with a 21 period Welles Wilder Smoothing line.
In this example the trader believes the uptrend is going to continue and will use the Welles Wilde Smoothing to find a good entry for his long (buy) trades. Notice how the Wilder line is serving as a support line to the price, signaling buy entries when the market is temporarily correcting to the downside towards the line.