|4/21/2004 9:05:20 AM
|Inverse Fisher Transform (RSI)|
Weighted MA Period
Inverse Fisher Transform(5,9)
Developed by John Ehlers, the RSI-based inverse Fisher Transform is used to help clearly define trigger points. First, a specified length RSI is computed and adjusted so that the values are centered around zero. The inverse transform is then applied to these values. The inverse transform is effectively:
e^(2x) - 1|
e^(2x) + 1
The author then recommends smoothing this value using a weighted moving average. StockFetcher smooths this value using a weighted simple moving average of the length specified in the second parameter.
Resulting values range between 1.0 and -1.0 with bullish triggers occurring at crossovers of -0.5 and bearish triggers of 0.5.