Fisher Transform on Gold

What it shows

A blue Fisher line chased by an orange trigger, one candle behind it, against guides at 1.5, 0.75, 0, -0.75 and -1.5. There is no 0 to 100 style scale: the log stretches readings near the edges, so the line can run well past 1.5.

How Pravex works it out

1. Middle of the candle = (high + low) ÷ 2. Find the highest and lowest middle over the last 9 candles.
2. Position = (middle − lowest) ÷ (highest − lowest) − 0.5, so it runs from -0.5 to +0.5.
3. Value = 0.66 × position + 0.67 × previous value, held between -0.999 and +0.999.
4. Fisher = 0.5 × ln((1 + value) ÷ (1 − value)) + 0.5 × previous Fisher. Trigger = the previous candle’s Fisher. A candle where the window has no range is skipped.
5. Stepping through it with invented inputs: a position of +0.4 with a previous value of 0.2 gives a value of 0.40, and with a previous Fisher of 0.30 the Fisher line lands near 0.57.

Settings

Setting	Default	What changing it does
Length	9	How many candles set the high-to-low range the position is measured in. A shorter window makes the line swing quicker and cross the trigger often; a longer one is slower.

How traders read it

Past the outer guide at 1.5, or under -1.5, the line says the middle of the candle is at the very top of its 9-candle range, and below -1.5 at the very bottom. These can persist during a strong run.

Watch the blue line against the orange one. Blue crossing above orange means the Fisher value turned up this candle; crossing below, it turned down. A cross that happens out past ±0.75 comes from a stretched spot, and many readers give it more weight than one near zero.

The zero line separates the upper half of the recent range from the lower half. Crossing it means the middle of the candle moved from one half to the other.

When it misleads

The line is smoothed twice over, so it lags a little, and crossings come in clusters when price is flat inside its range. A reading beyond 1.5 does not mean a reversal: in a strong trend the window keeps resetting and the line stays out there. In a calm stretch of small gold candles the 9-candle range is thin, so the line swings widely on small moves. Gold trades about 23 hours on weekdays and has no weekend candles.

Questions and answers

What does the Fisher Transform show?

Where the middle of the candle sits inside the last 9 candles’ range, with a log stretch that exaggerates readings near the top and bottom.

What is the orange line?

It is the Fisher value from the candle before. When the two lines cross, the Fisher line has changed direction.

Does a shorter Fisher length give earlier turns?

Earlier, and more of them. With 5 candles instead of 9 the range resets quicker, so the blue line flips across the orange one on smaller wiggles, and more of those flips go nowhere on gold.

Why can the Fisher Transform go above 1.5?

The log stretches values near the edges of the range, so a strong run pushes it well past 1.5. The inner value is held just inside -1 and +1, which keeps the line finite.

Related: Relative Vigor Index, Stochastic Momentum Index, Connors RSI, every indicator.