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Introduced by John Elhers, the Fisher Transform is based on the article "Using The Fisher Transform" in the November 2002 issue of Stocks and Commodities Magazine.
It was designed to clearly define major price reversals with its rapid response time and sharp, distinct turning points. It is based on the assumption that prices do not have a Gaussian probability density function (PDF) (bell-shaped curve movement), but that by normalizing price and applying the Fisher Transform you could create a nearly Gaussian PDF.
Interpretation
Singals can be generated by the crossover points of the Fisher and its signal line.
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