The name of the indicator might be a bit misleading. Holts double
exponential smoothing is mostly used for forecasting, not as an average.
The forecasting method usually used with it is a sort of linear
Like the regression forecast, the double exponential smoothing forecast is based on the assumption of a model consisting of a constant plus a linear trend.
For the purposes of a forecast where the parameters of the
model may change, it is more convenient to express the model as a
function of , where is the positive displacement from a reference time
The estimate a and b at time T are based in the observation at time T and the estimates for the previous period, T -1.
we have both the constant and trend coefficients estimated by
exponential smoothing. The forecasting parameters, for the constant term
and for the trend term can be set independently. Both parameters must
be between 0 and 1.
The forecast for the expected value for future periods is the constant plus a linear term that depends on the number of periods into the future.
make it usable in both manners though (as an average or as an "average"
with forecasting, setting the number of forecasted bars to <= 0,
turns the forecasting part off.
As usual with the forecasting parts, it is strongly advised not to use it in signaling mode. The forecasting part is a subject of change and should be used only as an estimation of trend component of the double smoothing, not as signal. Alerts in this indicator are not alerting on the change of the forecast part, but on the change of the "past" part - which is not going to change with time past