# KDE Value Clouds KDE Value Clouds is an indicator on [Vela](https://vela.luxalgo.com/chart), our next-generation charting platform, written in Pine Script®. Maps the statistical distribution of price with kernel density estimation, painting gradient value clouds over accepted zones plus a smooth side profile with its own point of control. Bandwidth adapts automatically via Silverman's rule, replacing arbitrary profile bins. For traders reading balance, inefficiency, and rotation targets statistically. - Indicator in the LuxAlgo Library, by LuxAlgo, published Feb 18, 2026. - Access: free. - Concepts: [Kernel Density Estimation](https://www.luxalgo.com/library/concept/kernel-density-estimation/) (primary), [Value Area](https://www.luxalgo.com/library/concept/value-area/), [Volume Profile](https://www.luxalgo.com/library/concept/volume-profile/) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=cmpwn2sne003vvhsgt3zokxor - Page: https://www.luxalgo.com/library/indicator/kde-value-clouds/ **KDE Value Clouds** maps where the market has genuinely accepted price, using [kernel density estimation](https://www.luxalgo.com/library/concept/kernel-density-estimation/) instead of the binned rows of a conventional profile. Every observation in the lookback contributes a small Gaussian curve; their sum is a continuous density of price, and regions where the density is above half of its peak are painted onto the chart as gradient value clouds, with a smooth profile and statistical point of control drawn at the side. ## How to Trade the KDE Value Clouds? - **Bright, high-density clouds**: balance areas where both sides agreed on price. Expect rotation inside them and retracements to gravitate back toward them. - **Low-density gaps**: inefficient stretches crossed in a hurry; price tends to move fast through them and frequently revisits them before new balance forms. - **KDE POC**: the single highest-density level: support in bullish conditions, resistance in bearish ones, and a magnet while the market ranges. - **Cloud boundaries**: rejection at an edge argues for rotation; acceptance beyond a high-density cloud can open a trend phase. Mean-reversion entries in the gaps can target the nearest cloud or the POC; breakout entries wait for acceptance before leaving one. The clouds act as a statistically derived [value area](https://www.luxalgo.com/library/concept/value-area/), and Silverman's rule sets the bandwidth automatically so smoothing adapts to the volatility regime. ## KDE Value Clouds Settings - **Lookback Period**: bars included in the density. Higher values build macro value zones, lower values track short-term rotation. - **Bandwidth Multiplier**: scales the automatic smoothing; higher spreads broader clouds, lower sharpens detail. - **Precision (Steps)**: vertical resolution; more steps add detail at extra computational cost. - **Profile Width (%)**: horizontal footprint of the side profile. - **Show Value Cloud on Chart**: toggles the on-chart density overlay. ## Frequently Asked Questions ### How do the clouds differ from a volume profile? A profile buckets activity into discrete rows, so its shape depends partly on the bin size chosen. KDE replaces bins with overlapping continuous curves, removing that arbitrariness. The [Gaussian Volume Profile](https://www.luxalgo.com/library/indicator/gaussian-volume-profile/) offers a related smoothing idea applied to volume data. ### Does the KDE POC repaint? It updates as new bars enter and old bars leave the lookback window, which is by design: it always reflects the current distribution. Treat it as a rolling statistical anchor rather than a fixed historical level. ### How do I access KDE Value Clouds? The indicator is free on the LuxAlgo Library. This page can send it straight into Quant, our coding agent, to test lookbacks and bandwidths hands-on. You can also copy the source code from this page and run it anywhere Pine Script® runs. ## Related indicators - [Gaussian Volume Profile](https://www.luxalgo.com/library/indicator/gaussian-volume-profile/) (Kernel Density Estimation): markdown at https://www.luxalgo.com/library/indicator/gaussian-volume-profile.md - [Supply Demand Profiles](https://www.luxalgo.com/library/indicator/supply-demand-profiles/) (Value Area): markdown at https://www.luxalgo.com/library/indicator/supply-demand-profiles.md - [Volume Profile (Maps)](https://www.luxalgo.com/library/indicator/volume-profile-maps/) (Volume Profile): markdown at https://www.luxalgo.com/library/indicator/volume-profile-maps.md - [Volume Profile Matrix](https://www.luxalgo.com/library/indicator/volume-profile-matrix/) (Volume Profile): markdown at https://www.luxalgo.com/library/indicator/volume-profile-matrix.md - [Nadaraya-Watson Envelope](https://www.luxalgo.com/library/indicator/nadaraya-watson-envelope/) (Kernel Regression): markdown at https://www.luxalgo.com/library/indicator/nadaraya-watson-envelope.md - [Nadaraya-Watson Smoothers](https://www.luxalgo.com/library/indicator/nadaraya-watson-smoothers/) (Kernel Regression): markdown at https://www.luxalgo.com/library/indicator/nadaraya-watson-smoothers.md - [Structural SVM Ranker](https://www.luxalgo.com/library/indicator/structural-svm-ranker/) (Support Vector Machines): markdown at https://www.luxalgo.com/library/indicator/structural-svm-ranker.md - [Machine Learning: Gaussian Process Regression](https://www.luxalgo.com/library/indicator/machine-learning-gaussian-process-regression/) (Kernel Regression): markdown at https://www.luxalgo.com/library/indicator/machine-learning-gaussian-process-regression.md --- Source: https://www.luxalgo.com/library/indicator/kde-value-clouds/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/