Description

• Founded by John Elhers, It helps to identify price reversals by applying Fisher transform to price to have a Gaussian distribution
• It is build on the assumption that stock price do not have normal distribution and behave like a square wave
• Fisher Transform, converting price into Gaussian probability density function has sharp and clearly turning point

Interpretation

• Instead of stock price, indicator can also be used to give sharp and precise signals
• Indicator being negative value crossing above 0 level is a bullish signal
• Indicator being positive value falling below 0 level is a bearish signal

Default Parameters Used/Inputs

• High Line
• Low Line
• Price Line
• Period

Returns/Output

Fisher Transform values for the stock

Formula

FisherTf = 0.5*log((1+Value)/(1-Value))+0.5*FisherTf-1
where,
Value = 0.33*2*{(Price - Lowestn)/(Highestn - Lowestn) - 0.5}+(0.67*Value-1)