Ehlers Reflex Oscillator Normalizes Smoothed Price Residuals

Summary

This indicator implements John Ehlers’s Reflex Oscillator using a two-stage process. It first applies a Super Smoother to the selected price series, estimates a slope across the reflex period, and compares that projected path with observed smoothed values. The average residual is then divided by a smoothed estimate of its squared magnitude, producing a normalized oscillator centered around zero.

The script plots the oscillator with configurable upper and lower reference levels and optional area shading. Inputs control the reflex lookback, Super Smoother period, and post-smoothing; the author describes the adjustable smoothing controls as experimental additions to the original formulation. The accompanying description characterizes the indicator as reversal-sensitive and low-lag, and claims a bounded range across sampling intervals, but supplies no test results or methodology supporting those claims. Thresholds can be adjusted for charting or alerts, yet the document does not establish that threshold crossings are profitable signals.

Key ideas

• The oscillator smooths price before measuring deviations from a projected slope over a selected period.
• It normalizes the average residual using a smoothed estimate of squared residual size.
• The zero line and configurable thresholds provide visual reference levels.
• Separate controls allow changes to the smoothing and post-smoothing periods.
• The document gives no empirical trading results validating the indicator’s claims.

Tags

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