Roofing Filter Signal Interpretation for Short-Term Trends
Summary
The document presents the Roofing Filter as an indicator developed by John Ehlers and explains a simple way to interpret its signal line. A cross above the signal is treated as evidence of a short-term uptrend, while a cross below is treated as a short-term downtrend. The suggested rule is to enter or hold long exposure when the indicator is colored green and to sell when it turns red.
No formula, parameter settings, market selection, backtest, or risk controls are provided. The text therefore describes a directional signal concept rather than demonstrating that it predicts returns. It also does not explain how to handle whipsaws, position sizing, transaction costs, or conflicting timeframes, so users would need to specify and test those details before relying on the indicator.
Key ideas
- The Roofing Filter is attributed to John Ehlers.
- A crossover above its signal line is interpreted as a short-term bullish condition.
- A cross below the signal line indicates a short-term bearish condition.
- The suggested color rule is to buy on green and sell when the indicator turns red.
- The document offers no formula, performance data, or risk management rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.