Ehlers Inverse Fisher Transform Applied to RSI and RSX

Summary

This document describes an indicator that applies John Ehlers’ inverse Fisher transform to either RSI or RSX. The transform is presented as a way to reshape an indicator’s probability distribution and produce a smoother oscillator for timing buy and sell decisions. A linear weighted average smooths the selected oscillator before the transform is applied. The indicator then derives upper, lower, and midpoint levels from the oscillator’s recent minimum and maximum, with configurable periods and level percentages.

The page includes an implementation and describes settings for oscillator choice, lookback, smoothing, and threshold calculations. It identifies the concept’s publication in a technical analysis magazine in May 2004, but provides no test results, trading rules, or evidence that the transformed signals improve outcomes. The levels depend on a rolling range, so their meaning can change with recent data. The indicator is a timing aid, not a complete strategy, and requires independent evaluation.

Key ideas

• The indicator applies an inverse Fisher transform to an RSI or RSX oscillator.
• A linear weighted average smooths the oscillator before the transform is calculated.
• Upper, lower, and midpoint levels are derived from the oscillator’s recent range.
• The calculation exposes settings for oscillator type, period, smoothing, lookback, and threshold percentages.
• The document offers no empirical results or complete entry, exit, and risk rules.

Tags

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