Ehler Fisher Transform Indices Analysis and Ehlers Fisher Transform Trading Signals

Developed by John Ehler,

Originally used to trade Stocks and Commodities Market.

Ehler Fisher Transform has 2 lines, the Fisher Transform line & the signal line: signals are generated when there is a cross-over of these 2 lines which looks like the stochastic oscillator.

It was designed to define major price reversals using the rapid response time & sharp, distinct turning points making it a leading indicator.

This indicator is based on the assumption that the prices do not have a Gaussian probability density function (bell shaped curved movement), but that by normalizing price & applying the Fisher Transform you can create a nearly Gaussian probability density function on the lines drawn.

Ehler Fisher Transform

Indices Analysis and How to Generate Trading Signals

Trading signals can be generated with pin-point accuracy by using the cross-over points of the Fisher Transform & its signal line.

However, this Ehlers Fisher Transform is not very accurate, as with all leading indicators, it gives many false signals & it's prone to whipsaws, it's therefore recommended to trade it in combination with other indicators.