Ehlers Decycler

Parameters: period = 125 (20–250)

Overview

The Ehlers Decycler, introduced by John F. Ehlers in his September 2015 article in Stocks & Commodities magazine, revolutionizes trend detection by applying digital signal processing to remove high-frequency components from price data. Unlike traditional smoothing methods that add lag, the Decycler subtracts high-pass filter output from the original price series, leaving only low-frequency trends with minimal delay - typically less than 1.5 bars for a 20-bar cycle period.

What makes the Decycler invaluable for 2025 trading is its role as an "immediate trend detector" that gives a true depiction of market direction without the wiggles that trigger false signals. By eliminating short-wavelength components through cancellation rather than smoothing, it preserves trend integrity while achieving exceptionally low lag - the longest cycle elements experience delays of less than five bars, making it superior to any moving average for real-time trend identification.

Interpretation & Trading Signals

Hysteresis Band Method:

  • Price Above Upper Band: Market in confirmed uptrend - maintain long positions
  • Price Below Lower Band: Market in confirmed downtrend - consider short positions
  • Between Bands: Neutral zone - await directional breakout
  • Band Percentage: Typically set at ±0.5% to ±1% of Decycler value

Decycler Oscillator Strategy (2025):

  • Dual Decycler Crossover: Enter long when fast crosses above slow Decycler
  • Exit Signal: Close position when fast crosses below slow Decycler
  • Trend Reversal Detection: Oscillator helps identify reversals with almost no lag
  • Parameter Pairs: Common settings are 50/100 or 60/120 periods

Advanced Applications:

  • Immediate Trend Representation: Best with larger cutoff periods (125+ bars)
  • One-Pole Filter Note: Not ideal for smoothing - focus on trend detection
  • Dynamic Support/Resistance: Decycler line acts as major S/R level
  • Market Regime Filter: Only trade when price consistently above/below Decycler

Example Usage

Code examples will be available once the Rust implementation is complete.

Performance Analysis

Related Indicators

Bandpass Filter

Technical analysis indicator

Correlation Cycle

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Detrended Oscillator

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Empirical Mode Decomposition

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Efficiency Ratio

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Hilbert Transform - Dominant Cycle Period

Technical analysis indicator