Author: LeMan
The Vertical Horizontal Filter (VHF) is a handy tool for traders, helping you identify whether the market is trending or ranging.
Originally introduced by Adam White in 1991, VHF has become an essential part of many traders’ toolkits.
How to Interpret the VHF Indicator
There are three main ways to interpret the VHF values:
- Price Direction: Higher VHF values indicate a more stable trend. If VHF is climbing, it shows that prices are moving decisively in one direction.
- Market State: Observing the direction of VHF can help you determine if the market is trending or ranging. An upward movement in VHF signifies a trend, while a downward movement suggests a potential range or flat market.
- Contrarian Indicator: The VHF can also serve as a contrarian tool. If VHF readings are high, it might signal an impending range, whereas low readings could indicate that a new trend is on the horizon.
This indicator first made its way into MQL4 and was published on CodeBase on September 8, 2009.
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