Detrended Ehlers Leading Indicator for Cyclic Turning Points

Summary

The Detrended Ehlers Leading Indicator (DELI) is described as a cycle-based tool for anticipating possible turning points in price. It begins with a synthetic price intended to stay in phase with the dominant market cycle. The document explains this as the difference between two Butterworth-filter outputs, using different filter orders. It then removes a smoothed version of that detrended series, leaving an oscillator that can lead cyclic turns.

The provided implementation uses recent highs and lows to form a midpoint price, applies two exponential smoothing calculations at different rates, and subtracts a further smoothed value from their difference. The example sets a default period of 14. The document offers a conceptual explanation and code, but no chart, market sample, backtest, or measured predictive results. It cautions that usefulness for forecasting turning points depends on the chosen period, so the indicator should be treated as a cycle hypothesis rather than established evidence of profitable timing.

Key ideas

• DELI is designed to provide an early signal of potential cyclic turning points.
• It derives a detrended synthetic price from the difference between filters with different orders.
• The indicator subtracts a smoothed version of the detrended series from that series.
• The example forms its input price from recent highs and lows and uses a default period of 14.
• The document provides no performance evidence, and results may depend on the period setting.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.