Ehlers Fisher Transform Stocks Technical Analysis and Ehlers Fisher Transform Stocks Signals

Developed by John Ehlers,

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 stocks price reversals using the rapid response time and sharp, distinct turning points making it a leading indicator.

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

Ehlers Fisher Transform

Stocks Technical Analysis and How to Generate 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.