Ehler Fisher Transform Commodity Trading Technical Analysis & Ehler Fisher Transform Trading Signals

Developed by John Ehlers,

Ehler Fisher Transform has 2 lines, the Fisher Transform line & the trading signal line: trading 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 commodity price reversals using the rapid response time and sharp, distinct turning points making it a leading indicator.

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

Ehler Fisher Transform

Commodity Trading Technical Analysis & How to Generate 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 Ehler Fisher Transform is not very accurate, as with all leading technical indicators, it gives many false trading signals and it's prone to whipsaws, it's therefore recommended to trade it in combination with other technical indicators.