Fisher Transform with Divergences by Santiago Rebello
### Concept & Purpose
This indicator is a advanced volatility-normalized momentum oscillator that merges J.F. Ehlers' classic Fisher Transform formula with an automated multi-type structural divergence engine. It aims to isolate structural market turning points by tracking momentum shifts before they reflect in linear price bars.
### How It Works (Components & Logic)
To maintain complete clarity and pass library publishing guidelines, here is the technical logic:
1. **Gaussian Data Normalization:** The script samples the median price (HL2) over a user-defined lookback length. It normalizes this range to sit tightly between -0.999 and 0.999 using an index clipping function.
2. **The Fisher Transform:** It converts this normalized data into a probability density function ($IFish = 0.5 \cdot \ln(\frac{1 + v}{1 - v})$). This converts smooth, rounded momentum curves into razor-sharp peaks and valleys, removing traditional lagging signals found in standard indicators.
3. **Automated Divergence Scanning:** The script maps price structures against the Fisher peaks using global-scope pivot point arrays.
### How to Trade This Script
* **Regular Bullish Divergence (Bull Reg):** Price creates a lower low, but the Fisher Transform creates a higher low. This indicates selling pressure is structurally exhausted. Look for a long entry as Fisher hooks upwards.
* **Hidden Bullish Divergence (Bull Hid):** Price creates a higher low, but the Fisher Transform creates a lower low. This signifies trend continuation; momentum is loading up for another push higher.
* **Regular Bearish Divergence (Bear Reg):** Price marks a higher high, but the Fisher Transform creates a lower high. Look for trend exhaustion shorts.
* **Hidden Bearish Divergence (Bear Hid):** Price marks a lower high, but Fisher marks a higher high. Signifies a strong trend continuation short setup.
### Settings & Optimization Notes
* **Pivot Left/Right:** Adjust these settings to increase or decrease the structural validation filter. Higher numbers result in fewer, more reliable long-term macro divergence lines. Lower numbers are optimal for short-term scalping structures.
This indicator is a advanced volatility-normalized momentum oscillator that merges J.F. Ehlers' classic Fisher Transform formula with an automated multi-type structural divergence engine. It aims to isolate structural market turning points by tracking momentum shifts before they reflect in linear price bars.
### How It Works (Components & Logic)
To maintain complete clarity and pass library publishing guidelines, here is the technical logic:
1. **Gaussian Data Normalization:** The script samples the median price (HL2) over a user-defined lookback length. It normalizes this range to sit tightly between -0.999 and 0.999 using an index clipping function.
2. **The Fisher Transform:** It converts this normalized data into a probability density function ($IFish = 0.5 \cdot \ln(\frac{1 + v}{1 - v})$). This converts smooth, rounded momentum curves into razor-sharp peaks and valleys, removing traditional lagging signals found in standard indicators.
3. **Automated Divergence Scanning:** The script maps price structures against the Fisher peaks using global-scope pivot point arrays.
### How to Trade This Script
* **Regular Bullish Divergence (Bull Reg):** Price creates a lower low, but the Fisher Transform creates a higher low. This indicates selling pressure is structurally exhausted. Look for a long entry as Fisher hooks upwards.
* **Hidden Bullish Divergence (Bull Hid):** Price creates a higher low, but the Fisher Transform creates a lower low. This signifies trend continuation; momentum is loading up for another push higher.
* **Regular Bearish Divergence (Bear Reg):** Price marks a higher high, but the Fisher Transform creates a lower high. Look for trend exhaustion shorts.
* **Hidden Bearish Divergence (Bear Hid):** Price marks a lower high, but Fisher marks a higher high. Signifies a strong trend continuation short setup.
### Settings & Optimization Notes
* **Pivot Left/Right:** Adjust these settings to increase or decrease the structural validation filter. Higher numbers result in fewer, more reliable long-term macro divergence lines. Lower numbers are optimal for short-term scalping structures.
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这些信息和出版物并非旨在提供，也不构成TradingView提供或认可的任何形式的财务、投资、交易或其他类型的建议或推荐。请阅读使用条款了解更多信息。
免责声明
这些信息和出版物并非旨在提供，也不构成TradingView提供或认可的任何形式的财务、投资、交易或其他类型的建议或推荐。请阅读使用条款了解更多信息。