Ehlers Loops for Comparing Normalized Price and Volume

Summary

This indicator adapts John Ehlers’ Ehlers Loops to compare price and volume after filtering and normalization. A two-pole high-pass filter removes slower components, a Super Smoother filters the result, and a fast RMS calculation scales each series. It offers oscillator plots for comparing their movements over time and a Crocker-style scatterplot that maps normalized volume against normalized price across a selected lookback.

The accompanying explanation uses the relative directions of price and volume to examine conventional interpretations of their relationship, and describes standard-deviation bands as reference levels. The document provides implementation details and conceptual examples, but no empirical performance results. The directional readings are discretionary, and the stated reversal probabilities depend on distributional assumptions; the plots alone do not establish predictive power or a trading edge.

Key ideas

• The method filters price and volume separately, then scales each series using a rolling root mean square.
• Oscillator mode makes it easier to compare the direction of normalized price and volume over time.
• Scatterplot mode traces normalized price against normalized volume to show the path and curvature of their relationship.
• The script displays standard-deviation reference levels, whose probability interpretation is not proof of reversal behavior.
• The document offers a visualization framework rather than tested evidence of profitable signals.

Tags

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