Ehlers Fisher Transform Forex Technical Analysis Forex Trading Signals
Developed by John Ehlers,
Originally used to trade Stocks and Commodities Market.
Ehlers Fisher Transform has two lines, the Fisher Transform line and the signal line; signals are generated when there is a crossover of these two 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 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.
Ehlers Fisher Transform
Technical Analysis and Generating Signals
Trading signals can be generated with pin-point accuracy by using the crossover 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 is prone to whipsaws, it is therefore recommended to trade it in combination with other technical indicators.