The Inverse Fisher Transform can be applied to any oscillator-type indicator such as the RSI (Relative Strength Indicator) and the Cyber Cycle.

The Inverse Fisher Transforms purpose is to alter the probability distribution function (PDF) of indicators.

The PDF of price and indicators do not have normal probability distribution. Turning points should be sharply peaked as a result of altering the PDF of an indicator.

The Fisher transform is expansive; the inverse Fisher transform is compressive. The calculation limits the range from -1 to +1; this probability distribution makes for clear buy and sells signals.

When using the inverse Fisher transform with the RSI, buy when the indicator crosses over -0.5, or crosses over +0.5 (if it has not previously crossed over -0.5). Sell short when it crosses under +0.5, or crosses under -0.5 (if it has not previously crossed under +0.5).

More detailed information on the inverse Fisher transform can be found in the May 2004 issue of Technical Analysis of Stocks and Commodities

(http://www.traders.com).