The Fisher Transform indicator is used to identify price reversals via Fisher transformation technique.
The study first normalizes the median price within its range over a specified number of bars so that its values oscillate between -1 and +1. The results are then smoothed with 5 period EMA and limited to fit (-1;1) interval. This restriction prevents the following Fisher transformation applied to the smoothed price data from blowing up.
Along with the derived line, the Fisher Transform indicator plots the same line delayed by one bar so that the crossovers identify the price reversal points.
||The price used in calculations.|
||The number of bars used to normalize the median price.|
||The Fisher Transform plot one bar back.|
||The Fisher Transform plot.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.