Friday, April 21, 2006
Technical Indicators
Ehlers' Fisher Transform
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Ehlers' Fisher Transform
The Fisher Transform indicator attempts to be a major turning point indicator and is based on John Ehlers' November 2002 Stocks and Commodities Magazine article, "Using The Fisher Transform."
With distinct turning points and a rapid response time, the Fisher Transform uses the assumption that while prices do not have a normal or Gaussian probability density function (that familiar bell-shaped curve), you can create a nearly Gaussian probability density function by normalizing price (or an indicator such as RSI) and applying the Fisher Transform. Use the resulting peak swings to clearly identify price reversals.
With distinct turning points and a rapid response time, the Fisher Transform uses the assumption that while prices do not have a normal or Gaussian probability density function (that familiar bell-shaped curve), you can create a nearly Gaussian probability density function by normalizing price (or an indicator such as RSI) and applying the Fisher Transform. Use the resulting peak swings to clearly identify price reversals.
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