[blackcat] L2 Ehlers Leading Indicator

31 Okt 2020

Level: 2

Background

John F. Ehlers introuced Leading Indicator in his "Cybernetic Analysis for Stocks and Futures" chapter 16 on 2004.


Function

The leading characteristic is present in the net filte.As predicted, the lead is one bar at very low frequencies. That is, the trend indication will lead by one bar. However, the net filter has a lag of approximately 2.5 bars for cycle components near 20-bar cycles. Also, higher-frequency lag settles down to be about half a bar. The interpretation of the lag response is that the filter predicts a continuation of a trend by 1 bar, lags abrupt changes by about 0.5 bars, and lags smooth changes that can be fitted by segments of a 20-bar sinewave by as much as 2.5 bars. That’s the law of physics—you cannot get something for nothing. Causal filters can have a predictive capability over some portion of the frequency response, but not at all frequencies. There is no magic predictor.


Key Signal

NetLead ---> Leading Indicator fast line
EMA ---> Leading Indicator slow line


Pros and Cons

100% John F. Ehlers definition translation of original work, even variable names are the same. This help readers who would like to use pine to read his book. If you had read his works, then you will be quite familiar with my code style.

Remarks

The 35th script for Blackcat1402 John F. Ehlers Week publication.

Readme

In real life, I am a prolific inventor. I have successfully applied for more than 60 international and regional patents in the past 12 years. But in the past two years or so, I have tried to transfer my creativity to the development of trading strategies. Tradingview is the ideal platform for me. I am selecting and contributing some of the hundreds of scripts to publish in Tradingview community. Welcome everyone to interact with me to discuss these interesting pine scripts.

The scripts posted are categorized into 5 levels according to my efforts or manhours put into these works.

Level 1 : interesting script snippets or distinctive improvement from classic indicators or strategy. Level 1 scripts can usually appear in more complex indicators as a function module or element.

Level 2 : composite indicator/strategy. By selecting or combining several independent or dependent functions or sub indicators in proper way, the composite script exhibits a resonance phenomenon which can filter out noise or fake trading signal to enhance trading confidence level.

Level 3 : comprehensive indicator/strategy. They are simple trading systems based on my strategies. They are commonly containing several or all of entry signal, close signal, stop loss, take profit, re-entry, risk management, and position sizing techniques. Even some interesting fundamental and mass psychological aspects are incorporated.

Level 4 : script snippets or functions that do not disclose source code. Interesting element that can reveal market laws and work as raw material for indicators and strategies. If you find Level 1~2 scripts are helpful, Level 4 is a private version that took me far more efforts to develop.

Level 5 : indicator/strategy that do not disclose source code. private version of Level 3 script with my accumulated script processing skills or a large number of custom functions. I had a private function library built in past two years. Level 5 scripts use many of them to achieve private trading strategy.

11 Apr

Nota Keluaran

OVERVIEW This indicator implements the Ehlers Leading Indicator (ELI) with advanced divergence detection capabilities. It displays leading signals on price movements and identifies bullish and bearish divergences through multiple detection methods.
FEATURES
• Calculates Ehlers Leading Indicator using customizable Alpha parameters
• Plots Net Lead and EMA lines with dynamic fill coloring
• Displays BUY/SELL labels at crossover points
• Detects four types of divergences:

Regular Bullish
Hidden Bullish
Regular Bearish
Hidden Bearish • Customizable lookback periods and alert conditions
HOW TO USE

Input Parameters:
• Price: Select the price source (default: hl2)
• Alpha1: Set the first smoothing parameter (default: 0.25)
• Alpha2: Set the second smoothing parameter (default: 0.33)
• Pivot Lookback Right/Left: Adjust pivot detection range
• Max/Min of Lookback Range: Set maximum/minimum bars for divergence detection
• Toggle visibility of bullish/bearish divergences

Interpretation:
• Monitor Net Lead and EMA lines for trend direction
• Watch for BUY/SELL labels at crossovers
• Identify divergences by observing price and oscillator behavior
• Use alerts to notify of detected divergences

LIMITATIONS
• Requires sufficient historical data for accurate calculations
• Divergence detection may generate false signals in choppy markets
• Results depend heavily on chosen input parameters

NOTES
• The indicator uses the Ehlers Leading Indicator algorithm for forward-looking price prediction
• Alert conditions are available for all divergence types
• Colors can be customized through TradingView's settings panel