Ehlers Reverse EMA

Overview

The Ehlers Reverse EMA is an advanced momentum indicator designed by John Ehlers and implemented here with additional features for improved trading decision-making. This indicator helps identify trend direction, potential reversals, and generates precise buy/sell signals based on multiple confirmation methods.

What Makes It Unique
Unlike conventional EMAs, the Ehlers Reverse EMA uses a sophisticated reverse-engineering approach to provide smoother, more responsive signals with reduced lag. The indicator combines a proprietary EMA calculation with optional moving average confirmation to filter out market noise and highlight meaningful price movements.

Features

Dynamic Color Coding: Green when momentum is positive, red when negative
Moving Average Overlay: Optional MA with selectable types (SMA, EMA, WMA, VWMA)
Multiple Signal Generation Methods:

Zero-Line Crossovers: Signals when momentum shifts from positive to negative or vice versa
MA Crossovers: Signals when the Ehlers EMA crosses its own moving average
Combined Confirmation: Requires both zero-line and MA crossovers for highest probability signals


On-Chart Signal Visualization: Clear buy/sell arrows directly on the price chart
Customizable Parameters: Adjust alpha value, MA type, and signal generation to suit your trading style

How To Use

Add the main "Ehlers Reverse EMA" indicator to your chart
Add the companion "EREMA Signals" indicator to display buy/sell signals on the price chart
Ensure both indicators have matching settings for consistency

Signal Interpretation

Buy Signals (Green Triangles): Appear below price bars when conditions are met
Sell Signals (Red Triangles): Appear above price bars when conditions are met

Recommended Timeframes

Works well on all timeframes from 5-minute to daily charts. For swing trading, 4H or daily timeframes often provide the most reliable signals.

Strategy Applications

Trend Following: Use zero-line crossovers to enter with the trend
Momentum Trading: Use MA crossovers for entry and exit points
Confirmation Tool: Combine with price action or other indicators for higher-probability trades
Divergence Analysis: Compare indicator movement with price action to spot potential reversals

Parameter Settings

Alpha (Default: 0.1): Lower values create smoother lines but more lag; higher values increase responsiveness but may increase false signals
MA Length (Default: 14): Adjust based on your trading timeframe and style

This versatile indicator helps identify high-probability trading opportunities while filtering out market noise, making it valuable for both novice and experienced traders alike.