Fisher-Transformed Chaikin Oscillator for Turns and Divergences
Summary
The document explains an indicator that applies Ehlers’ Fisher Transform to the Chaikin Oscillator, which tracks changes in accumulation and distribution using bar closes and volume. The transform normalizes the oscillator over a rolling range and expands its extreme readings, making fixed overbought and oversold levels usable across instruments. A crossover of the Fisher line and its one-bar lag marks a direction change; an early reversal signal adds an extreme-zone condition and a cooldown. The author clarifies that the turn marker and the early signal’s curl detector are the same underlying turn condition.
Divergences are found by comparing successive Fisher pivots and reading price at those pivot bars. Regular divergences are framed as potential reversals, while hidden divergences suggest continuation. The article reports simulated signal frequencies and a bar-by-bar check of turn logic, but these are not evidence of trading profitability. Signals can be delayed by pivot confirmation, become too dense on short timeframes, and fail without usable volume data; pivot windows and normalization length affect their frequency.
Key ideas
- The Fisher Transform makes the Chaikin Oscillator dimensionless and stretches its extreme readings.
- A crossover with the one-bar delayed Fisher line marks a turn, while an early reversal signal gates that turn by an extreme reading and cooldown.
- Regular divergences are interpreted as possible reversals, while hidden divergences are treated as possible continuation signals.
- Divergence pivots are confirmed only after the right-side pivot window has elapsed.
- Signal density depends on settings and can become excessive on intraday charts.
- The indicator requires a volume feed and the reported simulations do not establish profitability.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.