Inverse Fisher RSI-MTF2

The Inverse Fisher RSI-MTF2 indicator is a momentum-based oscillator that applies the Inverse Fisher Transform to the Relative Strength Index (RSI) across multiple timeframes to identify potential trend reversals and entry points. By normalizing RSI values and smoothing them with a weighted moving average, this tool aims to provide clearer, more decisive signals by pushing values toward extreme levels of -1 or 1.

Usage

The Inverse Fisher RSI-MTF2 is primarily used as a crossover strategy to detect shifts in momentum. When the transformed RSI value crosses above the upper threshold (0.8), it generates a buy signal, suggesting a strong bullish shift. Conversely, when the value crosses below the lower threshold (-0.8), it generates a sell signal, indicating bearish momentum.

Because the script utilizes multi-timeframe (MTF) functionality, users can track momentum from a higher timeframe (e.g., Daily) while viewing signals on a lower timeframe chart. This allows for a top-down approach where short-term entries are aligned with broader market trends.

Details

The script functions by first calculating a raw RSI and centering it around zero. This value is then smoothed using a Weighted Moving Average (WMA) to reduce noise. The core logic involves the Inverse Fisher Transform function: (exp(2x) - 1) / (exp(2x) + 1).

This mathematical transformation is designed to make the RSI values "square," meaning the oscillator spends more time at the extremes and moves very rapidly between them. This characteristics helps in filtering out minor fluctuations and focusing on significant price movements. The request.security function is used to fetch these transformed values from a user-defined higher timeframe.

Settings

• RSI Main Period: Determines the lookback period for the initial RSI calculation.
• RSI Smooth Period: Sets the length of the Weighted Moving Average used to smooth the RSI before the transform is applied.
• Timeframe: Allows the user to select the specific higher timeframe from which the indicator data is pulled.

FAQ

How do I use the signals from Inverse Fisher RSI-MTF2?

Signals are displayed as triangles on the chart. An upward triangle indicates a bullish crossover above 0.8, while a downward triangle indicates a bearish crossunder below -0.8.

Can I use this on any timeframe?

Yes, the script is designed to work on various timeframes, but it is specifically built to fetch data from a secondary "Timeframe" setting. Ensure the selected Timeframe in settings is equal to or higher than your chart timeframe for the intended MTF effect.

How can I access Inverse Fisher RSI-MTF2?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.