Extra indicators
Fisher Transform
Turns the price's position in its recent range into sharp peaks and troughs that make turning points stand out.
The idea in plain words
Prices are not normally distributed, which hides turning points. The Fisher transform reshapes the price's position within its recent range so extremes become clear spikes.
How it is calculated
Scale the candle's midpoint into −1…+1 inside the high–low range of N candles, smooth it, and apply ½·ln((1 + x) ÷ (1 − x)). The trigger is the previous value.
x = 0.66 × ((mid − LL) ÷ (HH − LL) − 0.5) + 0.67 × x₋₁
Fisher = 0.5 × ln((1 + x) ÷ (1 − x)) + 0.5 × Fisher₋₁How to use it
- Fisher crossing its trigger line marks a likely turn.
- Extreme readings (beyond ±1.5 to ±2) warn of exhaustion.
Drawing conclusions
- Sharp, sudden turns are typical: it is designed to be decisive.
Example
GOLD H4: Fisher reaches +2.4 and crosses below its trigger; the rally pauses for the next few candles.
Prices in examples are illustrative.
Watch out for
- In strong trends it can stay extreme and give early reversal signals.
A little history
Introduced by John Ehlers in 2002 ("Using the Fisher Transform", Stocks & Commodities).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.