Ehler Fisher Transform Indices Analysis and Ehlers Fisher Transform Trading Signals

Created 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 and 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 and applying the Fisher Transform you can create a nearly Gaussian probability density function on the lines drawn.

Ehler Fisher Transform

Indices Analysis & How to Generate Trading Signals

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

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